Guron leaves Bezeq with growing investor interest

Ran Guron  credit: Rami Zarnegar
Ran Guron credit: Rami Zarnegar

Bezeq underperformed the main TASE indices during Ran Guron's tenure as CEO, but Barclays now targets a share price 44% above market.

Ran Guron (55), who made the surprise announcement yesterday that he would step down as CEO of telecommunications company Bezeq (TASE: BZQ) after less than two years in the post (and eighteen years at the company altogether), is apparently leaving because of a sense of having given his all. Guron plans to do a course for senior managers at Harvard.

Bezeq also changed chairperson recently, with Tomer Raved taking over from Gil Sharon, who was in the post for three years. This may perhaps have contributed to Guron’s decision. For his part, Guron said: "I leave the Bezeq group with a huge sense of satisfaction. Over the years, Bezeq has become part of me, and I leave behind me a strong, healthy, and growing company, with consistent growth in revenue and profits, and a strong balance sheet."

Guron’s compensation cost at Bezeq in the past five years alone totaled NIS 29 million. In 2022, it was NIS 7.1 million, a quarter of which was stock-based. Bezeq will now seek a replacement.

Whatever Guron’s reasons for leaving Bezeq, he joins a long list of public company CEOs who have stepped down in the past few months. "Globes" checked and found that from the start of the war in the Gaza Strip to the end of January, 30 CEOs resigned their posts in listed companies or companies they controlled. Last week, it was reported that the CEO of fuel stations company Sonol (which is not listed on the stock exchange), Nir Galili, would leave the job after fourteen years.

The wave of departures by top managers is exceptional in its scope, and it has affected real estate companies (Airport City, Minrav), industry (Ackerstein Group, Klil Industries, Rav Bariach), commerce and services (Danel, Globrands Agencies, Diplomat), and finance (Harel, Peninsula, Direct Finance, Psagot).

Among the reasons put forward for the phenomenon are worsening economic conditions; simply running out of steam after many years in the post, more than in other management positions; a move to another senior job; and changes in ownership.

A senior consultant told "Globes": "In some cases, the war made people think about their own lives, in a way perhaps similar to what happened during the Covid pandemic. When something so momentous happens, senior executives too ask themselves ‘perhaps the time has come for a change in priorities in my personal life?’"

Guron joined Bezeq as VP marketing after the company was privatized, when it began high-speed Internet services. After serving as deputy CEO, he was appointed CEO of mobile telephony subsidiary Pelephone, and later as CEO of broadcasting company Yes and Bezeq International as well. He introduced structural and strategic changes in these companies, resulting in substantial improvement in their results. Under his leadership, they launched new technologies, among the 5th generation cellular and a switch from satellite to an IP platform for Yes broadcasts.

A little under two years ago, Guron replaced David Mizrahi as CEO of the Bezeq group. Bezeq says that during this period "the company led the optic fiber market, and posted record results, thanks to substantial growth in its Internet activity, rapid growth in revenue from the business market, and development of new growth engines."

Bezeq is due to release its 2023 financials on March 13. The company is expected to report a net profit attributable to shareholders of NIS 1.32 billion and EBITDA of NIS 3.8 billion, and that its fiber-optic network reaches two million households. In 2022, net profit was NIS 1.2 billion, EBITDA was NIS 3.74 billion, and the fiber-optic network reached 1.6 million households.

Bezeq forecasts that its EBITDA will grow by an average of 1% a year in the coming years, amounting to 41-43% of revenue, and it aims to distribute 70% of its semi-annual post tax profit as a dividend. Bezeq is the only one of the local telecommunications companies to have restored dividend payments after an interval of several years. The main beneficiary is the controlling shareholder, Searchlight Capital Partners, which, together with David Fuhrer, controls B Communications, which holds 27.2% of Bezeq.

During Guron’s tenure as CEO, Bezeq’s share price rose 5%, less than the rise in the leading stock market indices. The group’s current market cap is NIS 13.4 billion.

Nevertheless, Barclays sees upside in the stock, and recently published an "Outperform" rating with a price target 44% above the current market price.

The bank hosted an investors’ meeting with the chairperson, Raved. "In fourteen years of covering telecommunications in Israel, we have rarely seen such interest on the part of investors as we saw in the meeting with Bezeq," said analyst Tavy Rosner. "That sounds counter-intuitive, given the political situation. In our view, overseas investors have kept their distance from this sector in the past year because of the judicial overhaul and the war. It seems, however, that they understand that Bezeq’s results have remained immune to the economic environment, and that the company is executing on its growth strategy."

Published by Globes, Israel business news - - on February 26, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Ran Guron  credit: Rami Zarnegar
Ran Guron credit: Rami Zarnegar
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