Bezeq Israel Telecom Posts Better-than-expected Quarterly Profit

The telecommunications giant earned $123 million between April and June.

Ahikam Seri/Bloomberg

REUTERS - Bezeq Israel Telecom posted a smaller-than-expected drop in quarterly profit, as a sharp decline in income at its mobile unit was offset by rising profit at its fixed-line and Internet division.

Israel's largest telecoms group said on Monday it earned 482 million shekels ($123 million) in the second quarter, down from 810 million a year earlier. Last year's results included a one-time gain of 582 million shekels from the sale of its Yad2 classified ads website.

Bezeq's revenue rose 15.7 percent to 2.6 billion shekels due to the consolidation for the first time of the results of its TV subsidiary Yes and higher revenue at its fixed-line division.

It was forecast to earn 400 million shekels on revenue of 2.58 billion, according to a Reuters poll of analysts.

Bezeq's mobile unit Pelephone recorded a 54 percent drop in profit, while its fixed-line division, which offers phone and Internet services, posted a 52 percent profit rise. In the 2014 quarter its fixed-line division had a provision of 117 million shekels for an employee retirement plan.

Pelephone and its two main competitors are grappling with a price war following a shake-up of Israel's mobile phone industry in 2012 that ushered in six new operators.

The number of subscribers at Pelephone fell 1.7 percent over the prior year to 2.566 million. Competition has also been fierce for Internet services.

Bezeq will pay a dividend of 933 million shekels, or 0.34 shekel a share, for the first half of 2015, representing nearly 100 percent of net profit.

Bezeq reiterated its 2015 outlook for net profit of about 1.5 billion shekels and earnings before interest, tax, depreciation and amortisation (EBITDA) of 4.2 billion