Bezeq The Israel Telecommunication (BEZQ) Q3 2023 earnings summary

Executive summary

• Q3 revenue was NIS 2,265 million, up 0.1% YoY; adjusted EBITDA rose 2.9% to NIS 974 million and adjusted net profit increased 13.7% to NIS 357 million, while reported net profit fell 1.7% to NIS 297 million.

• For 9M, revenue increased 1.9% to NIS 6,872 million; reported net profit rose 6.7% to NIS 951 million and adjusted net profit grew 9.1% to NIS 1.032 billion. Fiber and 5G adoption advanced.

Financial highlights

• Q3 adjusted EBITDA margin was 43.0%; adjusted net profit growth reflected lower operating and financing expenses. Reported operating profit declined 8.8% to NIS 425 million.

• 9M adjusted EBITDA increased 2.4% to NIS 2,897 million; reported EBITDA was NIS 2,795 million. 9M operating profit rose 0.7% to NIS 1,399 million.

• 9M free cash flow was NIS 989 million, up 3.1%; Q3 free cash flow was NIS 406 million, with improvement mainly affected by working-capital timing.

• 9M operating cash flow was NIS 2,547 million, down 2.4%; Q3 operating cash flow was NIS 919 million, up 43.4%. September-end cash and equivalents were NIS 1,153 million.

Outlook and guidance

• FY2023 guidance: adjusted EBITDA of NIS 3.8 billion, adjusted net earnings of NIS 1.32 billion and capex of NIS 1.75 billion; adjusted net profit guidance was raised from NIS 1.2 billion.

• The 2 million-household fiber deployment target was achieved at end-October; the target was 2 million households, and the credit-rating objective remained within the AA group.

• War effects had not materially affected activity or results at the reporting date; liquidity was considered sufficient to operate without raising equity or debt, while duration and economic impact remained uncertain.