Bezeq Int'l write-downs cut Bezeq's Q3 profit 85%

Bezeq Photo: PR

The subsidiary, which was recorded at a value of NIS 652 million on Bezeq's books, will be cut to a book value of NIS 123 million.

Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) had revenue of NIS 2.18 billion in the third quarter of this year, which compares with NIS 2.25 billion in the third quarter of 2019, representing a decline of 3.1%. The decline in group revenue stemmed from lower revenue in the Pelephone, Bezeq International and Yes units, partly offset by a rise in revenue from Bezeq's fixed-line services.

The group's operating profit for the third quarter totaled NIS 189 million, which compares with NIS 440 million in the third quarter of 2019, representing a 57% decline. The decline stemmed from accounting events at Bezeq International, which brought the company to a valuation of just NIS 123 million after write-downs.

Group EBITDA in the third quarter was NIS 653 million (30% of revenue), which compares with NIS 921 million (41% of revenue) in the corresponding quarter of 2019, representing a decline of 29.1%.

Adjusted EBITDA, excluding the write downs at Bezeq International, was NIS 914 million (42% of revenue). Adjusted EBITDA in the third quarter of 2019 was NIS 960 million (42.7% of revenue), making the year-on-year decline 4.8%.

Net profit for the third quarter of 2020 was NIS 26 million, which compares with NIS 177 million in the corresponding quarter of 2019, representing a decline of 85.3%, a result of the decline in operating profit and the write downs at Bezeq International. Adjusted net profit, excluding the write downs, was NIS 289 million, compared with NIS 207 million in the corresponding quarter, representing a rise of 39.6%.

Bezeq International caused a huge erosion of value in the group. The subsidiary, which was recorded at a value of NIS 652 million on Bezeq's books, will be cut to a book value of NIS 123 million. Bezeq International's third quarter revenue was NIS 315 million, which compares with NIS 329 million in the corresponding quarter, and the company posted an operating loss of NIS 275 million, which compares with an operating loss of NIS 40 million in the corresponding quarter. Excluding one-time items, the operating loss in the current quarter was NIS 7 million, compared with NIS 5 million in the third quarter of 2019. The net loss in the current quarter was NIS 305 million, which compares with a net loss of NIS 32 million in the corresponding quarter. Excluding one-time items, the current quarter's net loss was NIS 23 million, which compares with a net profit of NIS 3 million in the corresponding quarter.

Bezeq's fixed-line services continued to perform strongly, with revenue of NIS 1.04 billion in the third quarter of 2020, up 1.7% from NIS 1.03 billion in the corresponding quarter of 2019. Revenue from Internet services grew 3.8%, from NIS 393 million in the third quarter of 2019 to NIS 408 million in the third quarter of 2020.

Bezeq says that the rise in Internet revenue stems from higher average revenue per retail user, a revised tariff for wholesale Internet services, and rise in the number of wholesale Internet lines.

Satellite broadcaster Yes had revenue of NIS 313 million in the third quarter of 2020, which compares with NIS 334 million in the corresponding quarter, representing a decline of 6.3%. The company had to lower prices to keep subscribers. It lost 1,300 subscribers in the third quarter. Average monthly revenue per subscriber was NIS 187.

Published by Globes, Israel business news - en.globes.co.il - on December 1, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Bezeq Photo: PR
Bezeq Photo: PR
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