The share price of Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) fell sharply in heavy trading during the morning, after Psagot Investment House Ltd. downgraded its recommendation to "Sell" and cut its target price to NIS 5. Bezeq's share price fell 3.3% by midday today to NIS 5.89, giving a market cap of NIS 16.5 billion.
Psagot says that Bezeq's dividend yield will not compensate for the deterioration in the telecommunications sector. It believes that the regulator will intervene in the inland telephony market this year, after intervening in the mobile market during 2011. Competition in the sector will also intensify.
"Bezeq is liable to be hit on all fronts in the coming years by the creation of three new telecommunications groups and the opening of the communications infrastructure wholesale market, which will further intensify competition in the telephony and internet infrastructures markets," says Psagot.
It concludes, "Bezeq operates in an environment characterized by regulatory intervention and intensifying competition, which will shrink its revenue and profits in all segments. Uncertainty over the cancellation of structural separation and the new market conditions will affect trading in the shares in the near term."
Published by Globes [online], Israel business news - www.globes-online.com - on April 4, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012