Bezeq The Israel Telecommunication (BEZQ) Q2 2023 earnings summary

Executive summary

• Q2 revenue rose 3.3% YoY to NIS 2.299bn; adjusted EBITDA and adjusted net profit reached five-year quarterly highs.

• Fiber adoption, 5G plan growth and IPTV migration supported strategic growth across fixed-line, mobile and TV services.

Financial highlights

• Q2 adjusted EBITDA was NIS 987m, up 6.8%, and adjusted net profit was NIS 354m, up 14.2%; adjusted EBITDA margin was 42.9%, the highest since 2018.

• Reported Q2 operating profit rose 9.3% to NIS 506m and net profit rose 11.7% to NIS 343m; EPS was NIS 0.12 versus NIS 0.11.

• H1 revenue rose 2.8% to NIS 4.607bn; adjusted EBITDA increased 2.2% to NIS 1.923bn, adjusted net profit rose 6.8% to NIS 675m and reported net profit was NIS 654m.

• Q2 free cash flow was NIS 238m, down 33.7%; H1 free cash flow was NIS 583m, down 37.2%, affected by working-capital changes. H1 operating cash flow fell 17.3% to NIS 1.628bn.

Outlook and guidance

• FY2023 adjusted net earnings guidance increased from NIS 1.2bn to NIS 1.32bn; adjusted EBITDA guidance remained NIS 3.8bn.

• FY2023 capex guidance remained NIS 1.75bn and fiber deployment guidance remained 2m households; financial policy targets a high credit rating within the AA group.