2017 was a very turbulent year for Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ), including an investigation by the Israel Securities Authority that later developed into Case 4000, changes in the company's leadership, and a decline in the value of DBS Satellite Services (1998) Ltd. (YES), its satellite television subsidiary.
The group's revenue dipped 2.9% to NIS 9.8 billion in 2017, and its net profit for shareholders was off 0.7% to NIS 1.24 billion, a little higher than the figure quoted in the company's profit warning. EBITDA dropped 5.8% to NIS 3.8 billion. The profit warning resulted from a further decline in the value of Yes.
The Bezeq group is giving a lower profit guidance of NIS 1 billion for 2018, while its EBITDA is projected to increase slightly to NIS 3.9 billion. According to Bezeq's guidance, the group's free cash flow will drop from NIS 2.1 billion in 2017 to NIS 1.5 billion in 2018.
The Bezeq group includes Bezeq (landline business), mobile phone services ( Pelephone Communications Ltd.), international calls ( Bezeq International Ltd.), and Yes. Bezeq, managed by CEO Stella Handler, who is slated to resign soon, reported a 4.9% fall in revenue to NIS 4.2 billion and a 3.2% decrease in net profit to NIS 1.2 billion in 2017.
Pelephone, managed by CEO Ran Guron, saw its revenue drop 3.2% to NIS 2.5 billion in 2017, but EBITDA was up, and the company's net profit grew to NIS 95 million.
Bezeq International's results were similar to those in 2016, with NIS 1.5 billion in revenue and a NIS 127 million net profit. Yes, on the other hand, is under pressure from growing competition in the television market; the company reported that its revenue was down 5.4% to NIS 1.65 billion in 2017, and it posted a NIS 244 million net loss on the year and a 20% plunge in EBITDA to NIS 448 million. The company lost 27,000 net subscribers in 2017, leaving it with 587,000 subscribers at the end of 2017.
Published by Globes [online], Israel business news - www.globes-online.com - on March 29, 2018
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