Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ), controlled by Shaul Elovitz and managed by CEO Stella Handler, today published its first quarter results, showing a drop in revenue, but an increase in profit caused by a reduction in tax expenses in the quarter.
Bezeq's revenue fell from NIS 2.56 billion in the first quarter of 2016 to NIS 2.45 billion in the first quarter of this year, a 4.1% dip. Net profit rose from NIS 288 million in the corresponding quarter last year to NIS 350 million in the first quarter of this year, a 21.5% rise.
Bezeq reported NIS 113 million in tax expenses in the first quarter, down 38.3%, compared with NIS 183 million in the first quarter of 2016. The company attributed the decline in tax expenses to a reduction in its tax asset and recognition of NIS 64 million in deferred tax expenses caused by the reduction of the corporate tax rate from 26.5% to 25%.
Bezeq's operating profit was down 1.4% to NIS 566 million, and EBITDA totaled NIS 994 million (a 40.5% rate), 2.8% less than the company's NIS 1.02 billion EBITDA (a 40% rate) in the first quarter last year.
Cash flow from current activity tumbled 10.4%, from NIS 922 million in the first quarter last year to NIS 822 million in the first quarter of 2017. Free cash flow lost 26% to NIS 456 million.
The company predicts that its net profit available to shareholders would total NIS 1.4 billion in 2017, with a NIS 4 billion EBITDA and NIS 2 billion in free cash flow.
Landline business declines
Bezeq's revenue from landline activity fell 3% to NIS 1.08 billion, mostly due to lower revenue from telephony and other landline business. Revenue from telephony services was down 6% to NIS 361 million, while revenue from Internet services rose 3.8% to NIS 409 million.
The number of Bezeq Internet lines reached 1.58 million, 22,000 more than in the fourth quarter of 2016. The wholesale line base amounted to 414,000 lines given in the wholesale market framework, 37,000 more lines than in the preceding quarter. The number of wholesale market customers rose by 124,000 during the past year.
Average revenue per user (ARPU) for Bezeq's (retail) Internet customers was NIS 91, and its average revenue per line (ARPL) was NIS 57.
Revenue of cellular company Pelephone Communications Ltd. was down 3.7% to NIS 628 million, and its net profit grew NIS 16 million in comparison with the corresponding quarter last year. Pelephone's subscribers increased by 28,000 to NIS 2.43 million.
Bezeq International Ltd.'s revenue fell 3% to NIS 384 million, and its net profit jumped 40% to NIS 36 million as a result of an increase in business sector activity and the fact that the expenses of the collective workers agreement were recorded in the corresponding quarter last year.
DBS Satellite Services (1998) Ltd.'s (YES) revenue was down 3.4% to NIS 424 million, but the company posted a NIS 19 million profit in the first quarter, compared with a NIS 71 million loss in the first quarter of 2016. Yes's cash flow plummeted 67% to NIS 51 million, as predicted yesterday by "Globes."
Yes lost 6,000 subscribers in the first quarter, leaving it with 608,000 subscribers, while its ARPU was NIS 232.
Published by Globes [online], Israel Business News - www.globes-online.com - on May 18, 2017
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