Bezeq compensates for wilting landline business by developing other services
By Amitai Ziv
Yes profits increased despite signal disrupture debacle in third quarter
The Bezeq phone company yesterday reported a tiny increase in revenues in 2007 compared with the year before, to NIS 12 billion, and complained that the regulator is making its life impossible. UBS called its results a mixed bag, noting that Ebitda had exceeded expectations, operating income fell well short, but net profit bounded beyond the forecasts.
At a press conference following the release of its results, chief financial officer Alan Gelman commented that the company had managed to offset the drop in income from regular phone-line communications with revenues from other services.
Advertisement
Indeed, through the year 2007, the decline in landline communications was palpable. The number of Bezeq phone lines declined by 1.7% to 2.7 million, as callers opted for alternative providers. But the number of ADSL lines for high-speed Internet increased by 8% to 963,000 clients, and average revenue per ADSL user grew by NIS 1.90 a month to NIS 58.10.
Fourth-quarter revenues amounted to NIS 3.12 billion, an increase of 0.1% compared with the corresponding period of 2006. Bezeq netted NIS 315 million in the fourth quarter of 2007. Net income for the year soared by 64% to NIS 1.33 billion, Bezeq said.
The company will be sharing the increase in profit with shareholders: Yesterday it announced dividends of NIS 679 million. UBS, possibly unmoved by that news, yesterday repeated a Neutral rating for Bezeq stock. The analysts' 12-month price target for Bezeq stayed put at NIS 7, which is roughly where Bezeq's share price is anyway.
One of the Bezeq group companies is the Yes satellite television broadcast company, which reported fourth-quarter 2007 revenues of only NIS 347 million, its lowest take for the year. The main reason was that it compensated clients for weeks of service disruptions by opening up its "premium channels," which normally cost extra, to all Yes subscribers for three months.
The signal-disruption crisis, which the Israeli authorities ultimately said was caused by German and Dutch ships in the region, also sharply increased Yes' costs. Among other things, it had to hire extra help for its overloaded call center, and hired a plane and ship to track down the source of the signals that were disrupting broadcasts via the Amos satellites. All that increased its cost of sales to NIS 300 million in the third quarter of 2007.
Despite the extraordinary events marking the third quarter, Yes ended 2007 with Ebitda (earnings before interest, tax, depreciation and amortization) of NIS 329 million, compared with NIS 294 million in 2006, an increase of 17%. Yet the company continues to bleed money. It posted a net loss of NIS 117 million for the year 2007, but at least that compares favorably with its net loss of NIS 319 million for 2006.
Yes CEO Ron Eilon commented that the 2007 financial statement was the best Yes had ever presented. The company says it recruited 400 new customers each quarter.
Pelephone says it gained 6,000 new customers since the Communications Ministry rammed through the "portability reform" - which means that users can switch carriers and keep their personal phone numbers - in December 2007. Rival company Partner says about the same. Pelephone's quarterly revenues amounted to NIS 1.1 billion, and net profit fell 17% to NIS 104 million. Annual net profit increased by 20% to NIS 585 million on revenues of NIS 4.6 billion.
Haaretz.com, the online edition of Haaretz Newspaper in Israel, offers real-time breaking news, opinions and analysis from Israel and the Middle East. Haaretz.com provides extensive and in-depth coverage of Israel, the Jewish World and the Middle East, including defense, diplomacy, the Arab-Israeli conflict, the peace process, Israeli politics, Jerusalem affairs, international relations, Iran, Iraq, Syria, Lebanon, the Palestinian Authority, the West Bank and the Gaza Strip, the Israeli business world and Jewish life in Israel and the Diaspora.
