Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) reported flat revenue at NIS 2.91 billion, but lower profits for the first quarter as a provision for early retirements weighed on the company. Fixed-line revenue fell 9.7% to NIS 1.18 billion for the first quarter. The company attributed the drop to the mandated reduction in inter-network connection fees, which were partly offset by higher Internet, data communications and transmission services
Net profit attributable to majority shareholders fell 36.6% to NIS 407 million (NIS 0.15 per share) for the first quarter from NIS 642 million for the corresponding quarter. Operating profit fell 24% to NIS 665 million.
Bezeq CFO Alan Gelman attributed the drop in profit to a NIS 285 million provision for the early retirement of employees in the company's fixed line division. He added, "Group revenues remained stable despite the significant impact of the reduction in interconnect fees and growing competition in all markets in which the Bezeq companies operate."
Although cash flow from operations fell 3.8% to NIS 775 million for the first quarter, free cash flow rose 2.2% to NIS 462 million for the first quarter. Bezeq's capital expenditure on its fixed-line division rose 46.1% to NIS 333 million for the first quarter from NIS 228 million for the corresponding quarter as the company continues deployment of its next-generation network (NGN).
Bezeq's consolidated net financial debt rose to NIS 4.9 billion at the end of March from NIS 2.9 billion a year earlier, mainly due to the issuing of NIS 2.6 billion in new debt last year.
Bezeq International's revenue fell 4% to NIS 329 million for the first quarter from NIS 343 million for the corresponding quarter. The company attributed the drop to a decline in the international calls and hubbing markets. These declines were mostly offset by increased income from Internet services on the Private NGN network, subscriber growth, and growth in enterprise ICT solutions.
Revenue of satellite broadcaster DBS Satellite Services (1998) Ltd. (YES) rose 3.6% to NIS 406 million from NIS 391 million for the corresponding quarter. The company attributed the increase to 1.6% subscriber growth to 580,000 subscribers, and to premium services. Net loss, however ballooned to NIS 73 million for the first quarter from NIS 8 million for the corresponding quarter, due to higher financing expenses.
Bezeq's share price fell 1.1% in morning trading to NIS 9, giving a market cap of NIS 24.6 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on May 12, 2011
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