Bezeq reports increase in adjusted EBITDA and net profit, despite lower revenues

1 Dec 2021

Israel’s Bezeq has published its financial results for the quarter ended 30 September 2021, reporting an increase in adjusted EBITDA and adjusted net profit, despite a decline in revenues. In the three-month period under review the company reported turnover of ILS2.18 billion (USD677 million), down 1.7% from the ILS2.178 billion recorded a year earlier, with the decline attributed primarily to lower revenues from Bezeq International. In the fixed sector it reported total revenues of ILS1.04 billion, down 0.5% year-on-year, with increased turnover from ‘transmission and data’ and ‘cloud and digital services’ failing to fully offset a decline in fixed voice revenue, which slumped by 13.4% y-o-y to ILS220 million. In the mobile segment, meanwhile, group subsidiary Pelephone saw a marginal drop in revenue, from ILS545 million in Q3 2021 to ILS541 million a year later.

In terms of other key financial metrics, for 3Q21 Bezeq reported an adjusted EBITDA of ILS938 million, up from ILS914 million in the corresponding quarter of 2020, while operating expenses totalled ILS742 million, down 6.1% on an annualised basis; the latter decline was said to be primarily due to lower equipment expenses and interconnect payments. Reported net profit for 3Q21 totalled ILS284 million, representing a significant improvement from the ILS26 million recorded in 3Q20. Capital expenditure reached ILS445 million in 3Q21, up 0.7% y-o-y.

With regards to operational indicators, Bezeq reported that it had a total of 1.524 million ‘broadband internet lines’ (retail and wholesale combined) as of 30 September 2021, down from 1.565 million a year earlier. Of the total the lion’s share were retail connections – 1.01 million, up from 995,000. Also of note, it confirmed that, having continued what it termed a ‘massive deployment of fibre’, its in-deployment fibre-to-the-home (FTTH) network now covers one million premises. Meanwhile, ‘active telephony subscriber lines’ fell to 1.602 million, from 1.653 million at end-September 2020.

In the mobile sector, Pelephone’s mobile subscription total increased to 2.547 million at the end of the reporting period, up from 2.396 million in 3Q20, with the bulk of those – 2.074 million – being post-paid subscriptions. Driving growth, the company claimed, was its ‘gradual’ 5G network rollout, with it notably claiming that by the end of the reporting period it had ‘about half a million subscribers with 5G packages’. Looking ahead, Bezeq said it expects fifth-generation services be an engine for growth, while suggesting that ‘within a few years almost all its customers will switch to 5G’.

Israel, Bezeq (Israel Telecommunication Corporation), Pelephone