Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) has issued a warning of a possible "very material" impairment in the valuations of its subsidiaries.
In a notice to the Tel Aviv Stock Exchange, Bezeq said today that in the discussion of the multi-year forecasts of the group companies, the board of directors looked at certain scenarios for Bezeq International, mobile carrier Pelephone, and DBS Satellite Services (satellite broadcaster Yes). The notice said that Bezeq was examining whether it should regard its activity and the activities of Yes and Bezeq International as a single cash-producing unit instead of three. The treatment of the companies as three separate units is liable to lead to a situation in which a downward adjustment of the value of their businesses means writing off substantial amounts from the value of Yes and to a reduction in the company's net profit and shareholders' equity. Treatment of the businesses as a single unit will mean a substantially smaller write-down of Yes.
Bezeq's share price is currently down 3%.
At the end of 2017, the value of |Yes on Bezeq's books was NIS 1.35 billion, a decline of NIS 1.2 billion within a year. Four years ago, Bezeq bought the 50% stake in Yes belonging to its then controlling shareholder, Shaul Elovitch, at a valuation for Yes of NIS 2.1 billion.
Published by Globes, Israel business news - en.globes.co.il - on January 8, 2019
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