Efficiency measures see Bezeq’s net profit rise in 3Q13 despite revenue decline

7 Nov 2013

Israeli fixed line incumbent has revealed increase in net profit for the three months ended 30 September 2013, despite lower revenues, with chief financial officer David Mizrahi saying that the improvement in profitability reflected the company’s ‘focus on streamlining actions and improved processes in all the Group companies’.

In the quarter under review Bezeq generated a total turnover of ILS2.398 billion (USD668 million), representing a 3.8% year-on-year decline from the ILS2.494 billion reported in 3Q12. The drop, the company noted, was primarily related to lower cellular sector revenues, though it said there had been a moderation in the quarter-over-quarter decrease in mobile unit Pelephone’s turnover, while it had also seen relative stability in fixed line turnover. Operating profit in the third quarter of 2013 totalled ILS721 million, up from ILS667 million, while earnings before interest, taxes, depreciation and amortisation (EBITDA) stood at ILS1.050 billion, up from ILS1.026 million in the corresponding period of 2012. Net profit attributable to Bezeq shareholders in the quarter was ILS449 million, having increased by more than 31% against 3Q12, when the company posted a net income of ILS342 million.

On the back of the results Bezeq reitereated its full-year financial guidance, with the company forecasting net profit of between ILS1.7 billion and ILS1.8 billion in FY13, while EBITDA is expected to be between ILS4.25 billion and ILS4.35 billion.

In operational terms, Bezeq’s fixed voice lines in service numbered 2.223 million at the end of September 2013, down from 2.299 million, though almost unchanged from the 2.224 million reported at end-June 2013. Fixed broadband accesses, meanwhile, totalled 1.230 million, representing a 2.3% y-o-y increase from 1.153 million. In the wireless sector, Pelephone’s mobile subscriber base (excluding MVNO customers) stood at 2.683 million, down by more than five percentage points from the 2.839 million such customers on its books a year earlier.

Commenting on the quarterly performance, Bezeq chairman Shaul Elovitch said: ‘Once again our results reflect the positive impact of our strategic efforts as well as the significant resources we are investing in the quality and added value of the Group’s communications offerings. These initiatives are reflected in the constant improvement in our service standards, and in enhancing the technologies we employ.’