Pelephone Cuts Into Bezeq 3Q Net Profit

Bezeq itself earns NIS 342 million shekels in the quarter, down from NIS 550 million a year ago.

Competition in the mobile communications market continued to make waves in the third quarter, with the net profit of Bezeq plunging 38% from a year ago, as its Pelephone unit's revenues sagged.

Pelephone, which together with its largest rivals, Cellcom Israel and Partner Communications, has been hit hard by the cellular-market reform last spring, saw its quarterly profit slide 41% to NIS 154 million. Revenue dropped 26% to NIS 1.05 billion, even as it preserved its subscriber base, which fell by just 0.1%.

Bezeq itself earned NIS 342 million shekels in the quarter, down from NIS 550 million a year ago. Revenue slipped 15% to NIS 2.49 million shekels, while earnings before interest, taxes, depreciation and amortization were down 21% to just over NIS 1.03 billion.

"The financial results for the Bezeq group in third-quarter 2012 reflect deep changes in the Israeli telecommunication market and increased competition in all areas in which the group operates," Chairman Shaul Elovitch said.

The third quarter was the first complete earnings period since the shakeup of the mobile market, which sparked the entry of six new competitors and a price war. Since then,

While EBITDA and revenue were in line with the average forecast in a Reuters poll of analysts, its net profit was well below the estimated NIS 403 million. Ori Licht, head of research at IBI Israel Brokerage & Investments, said Bezeq is also feeling the pinch in its core landline business, where it lost 36,000 subscribers in the quarter. That was partly offset by an additional 17,000 Internet accounts it won in the three months.