Bezeq The Israel Telecommunication (BEZQ) Q1 2022 earnings summary

Executive summary

• Revenue was NIS 2.255bn, up 1.5% YoY; adjusted EBITDA rose 4.4% to NIS 958m and adjusted net profit increased 7.7% to NIS 322m.

• Reported net profit fell 30.9% to NIS 282m, mainly reflecting a prior-year property-sale gain and higher legal-claim provisions; reported EBITDA declined 14.5% to NIS 908m.

• Operating cash flow rose 56.6% to NIS 1.096bn and free cash flow increased 76.5% to NIS 570m, partly due to working-capital timing; net cash rose NIS 253m during the quarter.

Financial highlights

• Operating profit was NIS 460m vs. NIS 586m; basic and diluted EPS were NIS 0.10 vs. NIS 0.15.

• Other operating expenses were NIS 46m vs. NIS 152m of net income, including a NIS 125m property-sale gain in Q1 2021 and higher legal-claim provisions in Q1 2022.

• Net finance expense rose to NIS 85m from NIS 51m, including NIS 26m in early repayment costs; CapEx was NIS 430m, or 19% of sales.

Outlook and guidance

• 2022 guidance was unchanged: adjusted EBITDA of NIS 3.6–3.7bn, adjusted net profit of NIS 1.0–1.1bn and CapEx of NIS 1.7–1.8bn.

• Fiber target was 1.4m homes passed; 1.17m were passed in the guidance presentation. Coverage later reached 1.25m homes, with 143k connected customers at publication.

• DBS forecast operating losses and expects financial support; management expects available resources and an approved facility to cover the coming year’s operational needs. A NIS 40m facility or capital investment was approved for 15 months from April 1, 2022, with no use through the reporting date.

• The proposed DBS ISP activity and Triple Play offering depend on a special ISP license; the plan was excluded from DBS’s impairment-test forecast pending the license.