Bezeq cites increased competition as net profit declines by 40.5% in 2Q15

1 Sep 2015

Israel’s Bezeq has published its financial results for the quarter ended 30 June 2015, with lower net profit in the period once again attributed in part to increased competition in the country’s telecoms sectors.

In the second quarter of 2015 Bezeq’s total turnover reached ILS2.603 billion (USD671 million), up from ILS2.250 billion reported in the corresponding period of 2014. Notably, however, Bezeq highlighted the fact that this increase was related to the first-time consolidation of revenues totalling ILS439 million from satellite TV operator yes in the second quarter of 2015. Of the total, fixed revenues accounted for ILS1.11 billion, up marginally from ILS1.07 billion in 2Q14, with the growth said to have been driven by higher turnover from broadband services, while the company also pointed to the fact that a decline in telephony revenues had moderated ‘as the comparison to the corresponding quarter of 2014 was not influenced by the reduction in fixed call termination rates which occurred in the fourth quarter of 2013’. Wireless turnover at the group’s mobile unit Pelephone meanwhile declined by 14.5% y-o-y to ILS721 million in 2Q15, with cellular service revenues totalling ILS502 million in the period under review, down from ILS622 million a year earlier.

Bezeq’s operating profit for the second quarter of 2015 amounted to ILS794 million, compared with ILS1.23 billion in the corresponding period a year earlier, while EBITDA stood at ILS1.25 billion (EBITDA margin of 47.8%) in 2Q15, down from ILS1.55 billion (EBITDA margin of 69.0%) in 2Q14. Net profit in the three months ended 30 June 2015 meanwhile was ILS482 million, representing a 40.5% drop against the ILS810 million recorded for Q2 2014.

In operational terms, at the end of June 2015 Bezeq had a total of 1.418 million broadband subscribers on its books, up from 1.308 million a year earlier, while fixed voice lines numbered 2.204 million, down marginally from 2.205 million at end-June 2014. In the wireless arena, Pelephone’s subscriber base declined from 2.610 million at the end of June 2014 to 2.566 million a year later, with average revenue per user (ARPU) having fallen from ILS79 per month in 2Q14 to ILS65 per month in the corresponding quarter of 2015.

Commenting on the company’s performance, Bezeq chairman Shaul Elovitch was cited as saying: ‘The second quarter of the year was marked by increased competition in the telecom market, with full rollout of the wholesale market reform. We are leveraging our capabilities, developed through years of experience with infrastructure and service operations, to successfully meet the competition head-on. The next step in the consumer oriented reform should be to eliminate structural separation, thereby expanding competition into service offerings as well.’