Bezeq (TASE: BZEQ) published its consolidated financial report for 2004 on Friday afternoon. The report clearly shows that improved results by subsidiaries Pele-Phone Communications Ltd. and Bezeq International, combined with the smaller losses by YES satellite broadcaster, contributed to the company's good results last year.
Bezeq posted a net profit of NIS 621 million for 2004, compared with a loss of NIS 438 million for 2003. The large difference between the figures for the two years was mainly due to early retirement costs, and allowances for claims for salary and pension items made in 2003.
Bezeq posted NIS 9.27 billion in revenue for 2004, compared with NIS 7.98 billion for 2003. Most of the NIS 1.26 billion increase was because Bezeq fully consolidated the results of YES and Pele-Phone for the first time.
Revenue from inland communications fell by 5% from NIS 5.23 billion in 2003 to NIS 4.96 billion in 2004, mainly because of rate cuts in September 2003 and June 2004, and a decline in calls and dial-up Internet traffic. On the other hand, revenue from high-speed Internet user fees increased in line with the increase in the number of subscribers.
Bezeq lost 17,000 fixed-line telephone subscribers during 2004. At the end of the year, it had 2.9 million subscribers. Bezeq said that competition in fixed-lined telephony had been intensifying in recent years, and that more than two-thirds of all calls were initiated by or ended at a wireless network. Bezeq predicts that Internet use will increase in the coming years, which will enable customers to switch to IP telephony. Bezeq has 650,000 ADSL subscribers, two-thirds of all high-speed Internet subscribers in Israel.
Bezeq's consolidated cash flow from current operations totaled NIS 2.85 billion for 2004, compared with NIS 2.69 billion for 2003. Its shareholders' equity was NIS 7.5 billion as of the end of 2004, accounting for 37% of its balance sheet total, compared with NIS 6.8 billion at the end of 2003, or 42.5% of its balance sheet total.
When the financial report was published, Bezeq CEO Amnon Dick said, "Bezeq is being privatized at a moment when the group is looking better than ever. As things appear now, this will be the last annual financial report that Bezeq will publish with the government as its main controlling shareholder. The privatization of the company is being handled well, and the process appears to be professional, proper, and precise, and being carried out in accordance with the timetable.
"I cannot avoid saying that Bezeq's fixed-line communications still has a great deal of room for streamlining. A great deal of streamlining has been postponed until after privatization, especially in essential restructuring."
Published by Globes [online], Israel business news - www.globes.co.il - on March 6, 2005