‘Challenging’ 2013 sees Bezeq report 7% drop in revenues

7 Mar 2014

Israeli fixed line incumbent Bezeq registered a 7% decline in revenues for the twelve months ended 31 December 2013, as the company endured what its CEO termed ‘a challenging year’. For the period under review Bezeq reported total turnover of ILS9.563 billion (USD2.65 billion), down from ILS10.278 billion in the previous fiscal year. With the company stating that the decline in group revenue was primarily related to lower revenues from its mobile unit Pelephone, it added that this had been offset slightly by an increase in turnover at Bezeq International.

In the fixed line sector Bezeq generated revenues of ILS4.478 billion in 2013, down from ILS4.630 billion a year earlier, with fixed voice service turnover falling to ILS1.97 billion from ILS2.25 billion in 2012, primarily due to a reduction in the average revenue per line. By contrast, internet service revenues expanded by 10.4% to ILS1.29 billion from ILS1.17 billion as customer numbers continued to increase, coupled with an increase in average revenue per subscriber related to broadband speed upgrades. In the wireless arena, meanwhile, revenues in 2013 totalled ILS3.81 billion, down by almost 15% when compared to the ILS4.47 billion in the previous year. Cellular service turnover for the period under review stood at ILS2.81 billion, representing a drop of 13.9% from ILS3.26 billion in 2012, while handset revenues were ILS1.00 billion, down from ILS1.21 billion.

Operating profit in 2013 amounted to ILS2.82 billion, Bezeq reported, down 7.3% year-on-year, while earnings before interest, tax, depreciation and amortisation (EBITDA) totalled ILS4.13 billion (an EBITDA margin of 43.2%) compared with ILS4.48 billion in 2012 (EBITDA margin of 43.6%). Meanwhile, net profit attributable to Bezeq shareholders stood at ILS1.77 billion for FY 2013, down by 4.8% compared to ILS1.86 billion in FY12.

In operational terms, at the end of December 2013 Bezeq’s fixed voice subscriber base stood at 2.216 million, down by 2.3% compared to the 2.268 million it had on its books a year earlier. Broadband accesses by comparison continued to increase, reaching 1.263 million at end-2013, and representing a 8% increase against the same date a year earlier, with average revenue per user (ARPU) rising from ILS80 per month to ILS82 over the same period. Wireless voice subscribers continued to decline in the face of increased competition in the sector, meanwhile, falling to 2.642 million at the end of the reporting period, down from 2.800 million, with ARPU also falling, from ILS89 per month to ILS86.

Commenting on the company’s performance and its future strategy, Bezeq chairman Shaul Elovitch, was cited as saying: ‘2013 was a challenging year for the Bezeq Group, but thanks to our focus on customer needs, innovative investments in infrastructure, and targeted, efficient management across all units, we managed to maintain and even expand our leadership position. Our diverse group operations enable us to better meet increasing competition in each segment. We expect the Minister of Communications to complete the regulatory reform in a fair and balanced manner in the coming period, which will allow continued development of market competition, while removing the barriers and restrictions imposed on the Bezeq Group.’