Bezeq Earns 96% of Israeli Telecom Industry’s Combined Profits

Net was down 18.5% for the year amid intense mobile competition, but rivals ended with even bigger declines or losses.

Bezeq Israeli Telecommunication Corp. headquarters in Tel Aviv, Israel.
Bloomberg

While the rest of the Israeli telecommunications market is struggling under the weight of competition, Bezeq continues to post big — albeit declining — profits.

The company, Israel’s biggest telecommunications provider, said net profit for all of 2015 was down 18.5% from a year earlier, but at 1.721 billion shekels ($450 million) it accounted for 96% of the industry’s combined profits.

Bezeq and its rivals — Cellcom Israel, Partner Communications and Hot Telecom — together reported a combined profit of 1.785 billion shekels for 2015. Partner turned in a 40 million-shekel loss while the rest saw profits tumble.

Bezeq said it would pay a giant 776 million-shekel dividend for the second half of the year, bringing the full-year total to 1.7 billion shekels. Bezeq shares, however, were up only 0.06% at the end of the day to 9.05 shekels.

In general, 2015 was a weak year for Bezeq, and this year doesn’t look to be any better as the telecoms sector copes with heightened competition unleashed in 2012 by deregulation of the mobile sector. The company forecast net profit of 1.4 billion shekels in 2016 and earnings before interest, tax, depreciation and amortization, or Ebitda, of 4.2 billion, the latter down from 4.25 billion in 2015.

Although Bezeq’s revenue was up 10.3% to 9.98 billion shekels in 2015 that increase was due to the consolidation of results with its Yes satellite television unit, which was merged into the company last year.

Bezeq posted an 11% year-on-year decline in fourth quarter profit to 369 million, weighed down by a steep drop in profits at its Pelephone mobile phone unit. Still, quarterly profit at Bezeq was above a forecast average of 349 million in a Reuters poll of analysts.

Boosted by the consolidation with YES, Bezeq’s revenue rose 15.2% to 2.6 billion shekels, in line with expectations.

Pelephone, Israel’s third-largest mobile operator, saw quarterly profit plunge 81% to 11 million shekels while revenue fell 14.6% to 713 million due to the end of a hosting agreement with Hot Mobile. The number of subscribers at Pelephone rose to 2.651 million from 2.586 million a year earlier.