In a new review on Israel's telecommunications industry, Psagot Investment House Ltd. says that Bezeq The Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and its pending new controlling shareholder Shaul Elovitch-controlled 012 Smile.Communications Ltd. (Nasdaq:SMLC; TASE: SMLC) and its parent company Internet Gold Golden Lines Ltd. (Nasdaq: IGLD; TASE:IGLD) "will reach new heights" in 2010.
Psagot analyst Talia Levinberg said that Bezeq began to reap the rewards of its strategic measures, especially the landline next-generation network (NGN) and new cellular network of subsidiary Pelephone Communications Ltd. during the third quarter of 2009. The rewards increased in the fourth quarter and will increase further during 2010. She therefore reiterated her "Buy" recommendation for Bezeq and raised her target price for the share by 6% to NIS 10.60, a 9% premium on today's opening price. Bezeq's share rose 0.2% by mid-afternoon today to NIS 9.74, giving a market cap of NIS 25.88 billion.
Levinberg cited NGN's huge potential in operational cost savings. "The strategic measures, further streamlining potential even before the NGN fruits, focused strategy, regulatory environment, and competition that is unlikely to field a significant challenge put Bezeq in an excellent position in 2010," she says, adding, "With a dividend yield of 9.5% in the second half of 2009, and 8% anticipated for 2010, Bezeq gives investors every criteria necessary to reiterate the "Buy" recommendation and as a preferred stock."
Levinberg also raised her price target for Eurocom Group subsidiary Internet Gold and its subsidiary Smile, through which Elovitch is acquiring the controlling interest in Bezeq. She gave Smile an "Outperform" recommendation with a target price of NIS 121, and Internet Gold a "Market perform" recommendation with a target price of NIS 105.80. Smile closed at $21.51 on Nasdaq on Thursday, giving a market cap of $545 million, and the share rose 2.4% by mid-afternoon on the TASE today to NIS 86.69. Internet Gold closed on Nasdaq at $18.96, giving a market cap of $342million, and the share rose 0.3% on the TASE today to NIS 75.51.
Published by Globes [online], Israel business news - www.globes-online.com - on January 4, 2010
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