Bezeq net profit up 21.5% in 1Q17 on lower tax expenses

18 May 2017

Israel’s Bezeq has published its financial results for the first three months of 2017, revealing an increase in net profit despite lower revenues.

In the quarter ended 31 March 2017 Bezeq generated a total turnover of ILS2.45 billion (USD680 million), down from ILS2.56 billion in the corresponding period a year earlier, with revenues declining across all group segments. Indeed, total mobile revenues fell to ILS628 million in the period under review, from ILS671 million in 1Q16, with mobile service revenue falling 4.4% year-on-year to ILS435 million. Fixed line revenues,meanwhile, declined by 3.1% y-o-y to ILS1.08 billion, with an annual 3.8% increase in turnover from broadband services failing to offset lower telephony and transmission and data revenues.

Operating profit in the first quarter of 2017 stood at ILS566 million, down from ILS574 million a year earlier, while EBITDA was ILS994 million in 1Q17, representing a 2.8% y-o-y drop. Tax expenses in the first quarter of 2017 were notably lower though at ILS113 million (1Q16: ILS183 million), with this attributed to a ‘reduction in the tax asset and the recognition of deferred tax expenses in the corresponding quarter of 2016 … resulting from a decrease in corporate tax rates from 26.5% to 25%’. On the back of this, net profit in 1Q17 totalled ILS350 million, compared to ILS288 million in the corresponding period of 2016.

In operational terms, at the end of March 2017 Bezeq’s mobile subsidiary Pelephone had a mobile subscriber base totalling 2.43 million, down from 2.69 million a year earlier, but up from 2.40 million at end-2016. Bezeq meanwhile reported that ‘broadband internet lines’ numbered 1.58 million at the end of the reporting period, representing y-o-y growth of 5.1%, of which 414,000 were wholesale broadband lines, up from 290,000 at end-March 2016.

Commenting on the company’s performance, Bezeq CEO Shaul Elovitch said: ‘The Group’s financial results in the first quarter reflect our continued drive towards investment, despite challenging market conditions. We are way ahead of competitors in our infrastructure investment. These investments are made with a long term vision of firmly establishing Bezeq as the leading telecom company in Israel in terms of cutting-edge infrastructure technology and service quality.’