Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bezeq The Israeli Telecommunication Corp Ltd (BZQIF, Financial) reported a 64% year-over-year increase in fiber take-up, indicating strong growth in this strategic area.
- The company saw a 28% increase in 5G subscriber plans, reflecting successful expansion in mobile services.
- Retail broadband ARPU increased by 6%, demonstrating improved revenue per user in the broadband segment.
- The board recommended a dividend distribution of ILS407 million, a 4% increase compared to the corresponding quarter, aligning with the company's 70% payout policy.
- Free cash flow grew by 11% in the first half of the year, showcasing strong cash generation capabilities.
Negative Points
- Core revenues declined by 0.9% due to lower infrastructure project revenues and decreased roaming revenues impacted by the conflict.
- Profitability was negatively affected by the MOC telephony reform and timing of infrastructure projects.
- The company experienced a decrease in net debt by ILS400 million, or 7% year-over-year, indicating financial pressure.
- The Fixed-Line segment saw a 1.8% decrease in core revenues due to lower infrastructure project revenues.
- The TV market faced increased competition, impacting revenues and profitability, particularly in the yes segment.
Q & A Highlights
Q: Can you provide insights into the decline in retail subscribers and fiber connections in the Fixed segment? Is this a trend we should expect to continue?
A: The decline in retail subscribers is in line with expectations, and while retail subs are slightly less on the Bezeq side, yes is experiencing strong growth. The wholesale market saw a slower pace this quarter, but we expect continued growth as more players use our infrastructure. The fiber rollout targets 90% of the market, excluding areas covered by the Universal Fund.
Q: What is the outlook for regulatory changes, and how confident are you about their impact?
A: Recent announcements by the MOC are meaningful, including discussions on the wholesale market and structural separation. While we can't quantify the chances of these changes, they are significant for the market and competition. The decommissioning of the copper network is also an important development.
Q: How do you view the competition in the TV market, especially with the impact of Free TV and your agreement with Partner?
A: The TV market is highly competitive, with movements towards skinny bundles and streaming services. yes is focusing on migrating customers from satellite to IP, which will reduce OpEx and CapEx by 2026. Despite competition, 70-80% of customers still use premium packages.
Q: Can you elaborate on the non-billed revenues due to the conflict and the impact on Bezeq International?
A: Non-billed revenues due to the conflict are not significant for the Group but affect yes more due to its size. Bezeq International is transitioning from consumer ISP to ICT services, focusing on cloud and data centers. This transition is long-term, with efforts to streamline operations.
Q: What is the competitive landscape in Israel for fixed and mobile services, and how are you addressing it?
A: The fixed-line market is rational with stable prices and high demand for fiber. We benefit from being the largest infrastructure provider. The mobile market is competitive with nine players, but Pelephone is growing with a 25% market share. In TV, competition is intense, but bundles help retain customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
