Bezeq The Israel Telecommunication (BEZQ) Q1 2023 earnings summary

Executive summary

• Record quarterly revenue of NIS 2.308bn, up 2.4% YoY, with growth across segments and the highest quarterly level since 2018.

• Reported net profit rose 10.3% to NIS 311m, while adjusted EBITDA fell 2.3% to NIS 936m.

• Fiber take-up reached a quarterly record across retail and wholesale, supported alongside revenue growth by 5G subscriptions and the TV-fiber bundle.

Financial highlights

• Revenue was NIS 2,308m versus NIS 2,255m; operating profit was NIS 468m versus NIS 460m.

• Adjusted net profit was NIS 321m, down 0.3%; reported net profit rose to NIS 311m from NIS 282m, with EPS of NIS 0.11 versus NIS 0.10.

• EBITDA was NIS 926m, up 2.0% YoY; adjusted EBITDA was NIS 936m, down 2.3%.

• Free cash flow was NIS 345m, down 39.5%, primarily reflecting working-capital timing; operating cash flow fell 22.2% to NIS 853m.

• Net financing expenses fell 23.5% to NIS 65m; adjusted EBITDA margin was 40.6% and capex was NIS 341m, or 15% of sales.

Outlook and guidance

• FY 2023 guidance remained unchanged: adjusted EBITDA of NIS 3.74bn, adjusted net profit of NIS 1.2bn, capex of NIS 1.75bn and free cash flow of NIS 1.41bn.

• Fiber deployment outlook was 2.0m households in 2023, versus 1.5m in 2022; the mid-term roadmap targets 2.7m homes passed.

• Network roadmap targets multi-gig services up to 10 Gbps in 2024 and 25 Gbps in 2027; a May Nokia trial demonstrated capacity up to 25 Gbps.

• Target is to maintain a credit rating within the AA group.