Bezeq’s third-quarter net profit drops on higher financing expenses

19 Nov 2019

Israel’s Bezeq has published its financial results for the quarter ended 30 September 2019, posting a more than 18% year-on-year drop in net profit, which it attributed primarily to an increase in financing expenses. For the three-month period under review Bezeq generated a total turnover of ILS2.247 billion (USD648 million), down 2.3% when compared to the ILS2.301 billion figure reported in 3Q18. Of the total, fixed line services (including broadband) accounted for revenues totalling ILS1.025 billion in 3Q19, down from ILS1.043 billion in the corresponding period a year earlier. Turnover from wireless unit Pelephone was actually up y-o-y it said, rising to ILS612 million in the third quarter, up from ILS604 million – with a 7.1% rise in equipment revenue, to ILS166 million, more than offsetting a 0.7% drop in service revenue to ILS446 million.

Bezeq’s third-quarter EBITDA totalled ILS940 million, down from ILS976 million, while it noted that financing expense had almost doubled to ILS205 million, compared to ILS109 million in 3Q18; it said this increase was due to higher expenses in the fixed line sector linked to fees of ILS73 million for the early repayment of debt, as well as an ILS42 million expense related to the provision of employee benefits. Meanwhile, net profit for 3Q19 was ILS191 million, down from ILS234 million in the year-ago period.

In operational terms, as at end-September 2019 Bezeq had a total of 1.589 million fixed broadband lines on its books, down from 1.663 million a year earlier, with wholesale broadband lines accounting for 601,000 of that figure (Sep-18: 617,000). Fixed voice lines also declined, falling to 1.743 million by the end of the reporting period, down from 1.843 million at 30 September 2018. Meanwhile, Pelephone was reported as having a subscriber base totalling 2.310 million as at end-September 2019, representing year-on-year growth of 5.7%, with the bulk of accesses – 1.895 million, up from 1.817 million – being post-paid.