Net Profit of Israeli Telecom Giant Bezeq Fell 46% From Last Year in 2Nd Quarter

Net was hit by steep declines in profit at its mobile phone and satellite TV units, amid intensifying competition as well as by an 80 million shekel provision for an early retirement plan

The logo of Bezeq Israeli Telecommunication Corp. is seen at the company's headquarters in Tel Aviv, Israel, on Wednesday, Dec. 29, 2010
Ahikam Seri/Bloomberg

The challenging conditions of the Israeli telecommunications market continued to weigh on Bezeq in the second quarter, as revenues declined and net profit fell by double digits from a year earlier.

Israel’s largest telecoms group said it earned 195 million shekels ($53 million) in the quarter, down 46% from 358 million a year earlier. Net was hit by steep declines in profit at its mobile phone and satellite TV units, amid intensifying competition as well as by an 80 million shekel provision for an early retirement plan.

Revenue slipped 5.3% to 2.3 billion shekels with all the company’s unit, part from its core landline telephony business, showing declines.

Bezeq, which has been shaken by an ongoing criminal investigation that has led to an exodus of its top executives and the loss of its controlling shareholder, was forecast to earn 207.5 million shekels on revenue of 2.35 billion, according to a Reuters poll of analysts.

Bezeq said it would pay a dividend of 318 million shekels, or 11 agorot a share, for the first half of 2018, representing 70% of net profit.

In spite of the company’s difficult situation, Bezeq shares rose about 10% this week, capped by an 8% gain Thursday to 4.32 shekels. Its parent company, B Communications, posted even sharper gains, jumping 18.2% to 34.53.

Analysts said the rally, after an extending period of decline for the stock, reflects confidence that Bezeq will be able to cut costs as promised by its chairman Shlomo Rodav, in part by getting permission from the Communications Ministry to end structural separation between its subsidiaries.

The company reiterated its 2018 forecast for net income of 1 billion shekels.