Bezeq The Israel Telecommunication (BEZQ) Q3 2022 earnings summary

Executive summary

• Q3 revenue rose 5.6% YoY to NIS 2.262bn; adjusted EBITDA increased 1.0% to NIS 947m and adjusted net profit rose 6.4% to NIS 314m.

• Q3 reported net profit increased 6.3% to NIS 302m; 9M reported net profit fell 9.6% to NIS 891m, while adjusted net profit rose 5.3% to NIS 946m.

• Growth was supported by fiber take-up, broadband ARPU gains, and Pelephone’s roaming recovery and 5G adoption; net debt fell NIS 600m YoY.

Financial highlights

• Q3 operating profit rose 1.5% to NIS 466m; adjusted EBITDA margin was 41.9%. 9M adjusted EBITDA increased 1.0% to NIS 2.829bn, with a 42% margin versus 43% in 9M 2021.

• 9M revenue increased 2.7% to NIS 6.742bn; operating profit declined 8.3% to NIS 1.389bn.

• Q3 free cash flow was NIS 467m, up 92.0% YoY; 9M free cash flow rose 22.2% to NIS 959m, partly reflecting working-capital timing.

• 9M operating cash flow rose 18.2% to NIS 2.609bn; investing cash outflow was NIS 1.882bn and financing cash outflow was NIS 831m.

Outlook and guidance

• FY22 guidance: adjusted EBITDA of NIS 3.65–3.75bn, adjusted net earnings of NIS 1.1–1.2bn, and capex of NIS 1.7–1.8bn.

• Fiber deployment target increased from 1.4m to 1.5m households; forecasts depend on competition, regulation, economic conditions, and execution.

• Financial stability objective is to maintain a credit rating within the AA group.