Bezeq The Israel Telecommunication (BEZQ) Q2 2024 earnings summary

Executive summary

• Strategic growth drivers included a 64% year-over-year increase in fiber take-up, 28% growth in 5G subscriber plans, and a 6% rise in retail broadband ARPU.

• Adjusted EBITDA fell 7.8% to NIS 910 million, mainly due to lower telephony revenues from regulatory reforms, project timing, and war-impacted roaming revenues.

• Fiber network reached 2.36 million homes passed with a 30% take-up rate.

• Board recommended a dividend distribution of NIS 407 million, a 4% increase year-over-year, maintaining a 70% payout policy.

• Launched electricity supply activities and a joint venture with Powergen; awarded a Platinum ESG rating by Maala.

Financial highlights

• Q2 2024 core revenues declined 0.9% year-over-year to NIS 1.9 billion, mainly due to lower infrastructure and roaming revenues.

• Adjusted EBITDA margin was 41.5%.

• Adjusted net profit dropped 17.5% to NIS 292 million.

• Free cash flow for Q2 2024 declined 25.2% to NIS 178 million, but H1 2024 free cash flow rose 10.8% to NIS 646 million.

• Net debt decreased by NIS 400 million (7%) year-over-year to NIS 5 billion.

Outlook and guidance

• Guidance for the year reiterated, with no significant deviation expected.

• Focus remains on midterm free cash flow growth, completion of fiber rollout and 5G expansion, and maintaining high credit ratings.

• Mid-term targets include 40% fiber take-up, retail ARPU above NIS 140, and 80% 5G subscriber penetration.