Bezeq net profit slumps in 2Q18 on lower revenues, early retirement provisions

23 Aug 2018

Israel’s Bezeq has reported lower revenues for the second quarter of 2018, attributing the fall in part to, ‘a large transaction in the ICT field recorded in the corresponding quarter [of 2017]’. For the three months ended 30 June 2018 Bezeq generated total turnover of ILS2.33 billion (USD640 million), down 5.3% year-on-year from ILS2.46 billion in Q2 2017. Revenues in the fixed line arena totalled ILS1.06 billion in 2Q18, representing a 0.6% annual increase, with higher turnover from broadband (ILS403 million, up from ILS381 million) and ‘cloud & digital services’ (ILS66 million, compared to ILS57 million) offsetting lower fixed voice telephony revenues, which fell by over 9% to ILS291 million. In the mobile arena, meanwhile, revenues totalled ILS602 million, down from ILS632 million in 2Q17, with service revenues representing ILS438 million of the most recent figure (2Q17: ILS449 million). Cellular equipment sales were down by almost 13%, at ILS164 million.

In terms of other key metrics, Bezeq reported an operating profit of ILS371 million for the period under review, down more than 35% on an annualised basis, with EBITDA declining by 8.9% to ILS908 million. Net profit in the second quarter of 2018 was ILS195 million, a significant drop from ILS997 million in 2Q17, with Bezeq saying the drop was ‘primarily due to the … decrease in revenues and the provision for the early retirement of employees’.

As at end-June 2018 Bezeq had a total of 1.662 million broadband accesses on its books, up from 1.593 million a year earlier, with 600,000 of those classified as ‘wholesale broadband internet lines’, up from 444,000 at mid-2017. Fixed voice lines, however, continued their downward trajectory, falling to 1.865 million at the end of the reporting period, from 1.961 million at 30 June 2017. Gains continued to be made in the cellular segment though, with the operator reporting 2.601 million mobile subscribers for Pelephone at 30 June 2018, up from 2.410 million a year earlier – although monthly ARPU dipped ILS4 y-o-y to ILS57.