Bezeq launches strategic review as it publishes first quarter results

25 May 2018

Israeli fixed line incumbent Bezeq has reported a 3.8% year-on-year decline in total turnover for the first three months of 2018 to ILS2.36 billion (USD661 million), with revenues having fallen in ‘all key group segments’. In the fixed line sector, revenues totalled ILS1.06 billion in 1Q18, down from ILS1.08 billion a year earlier, with the decline due to a reduction in fixed voice revenues, which was only partially offset by increased sales of broadband and cloud and digital services. In the cellular arena, meanwhile, total revenues were ILS619 million, down 1.4% y-o-y. Mobile service revenues were relatively stable at ILS431 million (1Q17: ILS435 million), which the telco attributed to the increase in revenues from new subscribers that was virtually wiped away by the decrease in ARPU ‘due to the transition of existing customers to lower priced plans including higher data plans corresponding to current market prices’. Operating profit in 1Q18 stood at ILS462 million, representing an 18.4% y-o-y decline, with EBITDA for the period under review totalling ILS987 million, down from ILS994 million in the corresponding quarter of 2017. Bezeq’s net profit for the first quarter of 2018 was ILS260 million, down from ILS350 million a year earlier.

In operational terms, Bezeq reported 1.653 million broadband lines in services at the end of March 2018, up from 1.580 million a year earlier, including 574,000 wholesale broadband lines (1Q17: 414,000). Fixed voice lines in service continued to decline, however, falling to 1.889 million at the end of the reporting period, from 1.986 million at end-March 2017. More positively, cellular subscriber numbers continued to climb, reaching 2.546 million at the end of March 2018, up 4.8% y-o-y from 2.430 million.

Commenting on the company’s performance, Bezeq chairman Shlomo Rodav was cited as saying: ‘Our group wide results in the first quarter of 2018 continue to demonstrate the increased competition and changes in all areas of the telecommunications market.’ With an eye to the future, the executive also confirmed the launch of a strategic review, noting: ‘We are in the process of formulating a long-term strategy for the group, taking into account regulatory constraints with the aim of eventually reaching the cancellation of structural separation for the benefit of all stakeholders in the company and for the benefit of the Israeli economy.’

In a separate press release regarding this review, it was noted that the company aims to ‘review certain issues aimed at focusing on the group’s future core operations, including synergies between the operations of the company’s subsidiaries, the sale of the subsidiaries Bezeq On Line Ltd. and Walla! News, increasing the independence of the wholesale activities in the company, and the establishment of an innovation unit that will act to position the company at the centre of the future communications world’. Bezeq has, however, indicated that it expects it to take ‘several months’ to formulate a full plan.