HOT Telecommunication Systems Ltd. (TASE: HOT) continued to lose TV cable subscribers but gain telephony and Internet subscribers as the company turned to a profit in the third quarter of 2010.
HOT posted a net profit of NIS 53 million for the third quarter compared with a net loss of NIS 14 million for the corresponding quarter of 2009. Revenue rose to NIS 816 million for the third quarter from NIS 789 million for the corresponding quarter.
HOT said that it faces NIS 969 million in copyright infringement lawsuits and demand for the payment of proper royalties. The lawsuits were filed by Israeli and foreign copyright organizations.
HOT also cautioned against the effect of digital terrestrial television (DTT), saying that the addition of more channels to the service is liable "to cause a substantial decline in the company's revenue and affect its future financial results."
During the third quarter, HOT lost an additional net 3,000 cable TV subscribers to 889,000 at the end of September from 892,000 at the end of June. The company had 911,000 cable TV subscribers at the end of September 2009. The company said that most of the former subscribers were analog customers with low average revenue per user (ARPU) and low profitability for HOT.
In contrast, HOT added a net 12,000 Internet subscribers during the third quarter to 741,000 at the end of September and added a net 10,000 telephony subscribers to 794,000. The company had 706,000 Internet subscribers and 536,000 telephony subscribers at the end of September 2009.
Cable TV revenue rose 1% to NIS 556 million for the third quarter from NIS 551 million for the corresponding quarter, and telephony revenue rose 9.2% to NIS 260 million from NIS 238 million. HOT attributed the increase in cable TV revenue to increased use of pay services and to higher prices, which partly offset the decline in the number of subscribers.
HOT's share price rose 0.7% in early trading to NIS 51, giving a market cap of NIS 3.85 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on November 18, 2010
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