Consolidation of yes boosts Bezeq revenues but net profit falls in FY15

18 Mar 2016

Israeli fixed line incumbent Bezeq has published its financial results for the year ended 31 December 2015, revealing a decline in its bottom line despite increased revenues. In the twelve-month period under review Bezeq generated a total turnover of ILS9.985 billion (USD2.56 billion), representing a rise of 10.3% against the FY14, thanks to the consolidation of turnover from pay-TV provider yes since the start of the second quarter of 2015, as well as higher revenues from both its fixed line and international services, all of which had helped offset lower mobile turnover. Total fixed line revenues were ILS4.41 billion in 2015, up from ILS4.32 billion a year earlier, with turnover from broadband services accounting for ILS1.54 billion of that, up 10.6% year-on-year on the back of increased lines in service. By contrast, fixed voice revenue declined by 4.9% to ILS1.59 billion, mainly as a result of a reduction in the average revenue per line of 4.8% in 2015, coupled with a lower number of lines in service. In the mobile arena, the company’s wireless subsidiary Pelephone reported turnover of ILS2.89 billion, representing a 15.5% drop against FY14, with service revenues from cellular services totalling ILS2.00 billion, down from ILS2.45 billion. Specifically, Bezeq said that the decline was due to a reduction of ILS211 million in hosting revenues as a result of the termination of the hosting agreement with Hot Mobile at the end of December 2014.

Bezeq’s EBITDA in FY 2015 was ILS4.254 billion, down from ILS4.507 billion in the previous fiscal year, while the EBITDA margin slipped from 49.8% to 42.6% in the same period. Net profit attributable to Bezeq shareholders in 2015 totalled ILS1.72 billion, a year-on-year decline of 18.5% from ILS2.11 billion. Capital expenditure in 2015 totalled ILS1.64 billion, up 28.2% from ILS1.28 billion in 2014, with the increase primarily due to the consolidation of yes investments beginning in the second quarter of 2015, in the amount of ILS200 million.

In operational terms, at the end of December 2015 Bezeq had a total of 2.181 active fixed voice subscriber lines, down from 2.205 million a year earlier, though fixed broadband accesses were up, rising to 1.479 million from 1.364 million. Wireless accesses also increased, reaching 2.651 million at the end of the reporting period, up from 2.586 million at end-2014, though there was a notable decline in average revenue per user (ARPU), which stood at ILS60 per month in FY15, compared to ILS75 in the previous year.