Bezeq Israel Telecom reported a 14 percent rise in quarterly net profit that beat estimates, as higher income from Internet services offset declines in the competition-hit mobile phone sector.

Bezeq, Israel's largest telecoms group, said on Monday it earned 473 million shekels ($133 million) in the second quarter, up from 415 million a year earlier. Revenue slipped 9.4 percent to 2.35 billion shekels.

Bezeq was forecast to record profit of 429 million shekels on revenue of 2.38 billion, according to a Reuters poll.

Its mobile unit Pelephone posted a 17 percent fall in profit to 161 million shekels on a 20.3 percent drop in revenue. But Bezeq said that the erosion of revenue in the mobile sector had moderated as "the aggressive promotions of new competitors are not as effective as in the past."

Pelephone, Israel's third-largest mobile operator, saw its subscriber base slip 5.5 percent to 2.702 million.

Pelephone and its two main competitors are grappling with a price war following a shake-up of Israel's mobile phone industry last year that ushered in six new operators.

Competition also led to a 4.8 percent drop in the number of Bezeq's active fixed-line subscriber lines, although it continued to gain customers for its high-speed Internet services amid a promotion of free upgrades to higher speeds. That led to a 5.8 percent rise in the number of Internet subscribers and a 33.5 percent jump in profit in the fixed-line segment.

Bezeq reaffirmed its forecast of 1.7-1.8 billion shekels in net profit this year and earnings before interest, tax, depreciation and amortization (EBITDA) of 4.25-4.35 billion shekels.
It said it plans to expedite the pace of deployment of its fiber optics network to businesses and homes to 400,000 by year-end from 200,000 currently.

Bezeq will pay a quarterly dividend of 969 million shekels, or 0.3555 per share, plus a special dividend of 500 million shekels - the last of six equal payments.