Bezeq The Israel Telecommunication (BEZQ) Q3 2024 earnings summary

Executive summary

• Core revenues grew 2.1% year-over-year to NIS 2.02 billion, driven by 3.6% growth in Fixed-Line and strong fiber and 5G subscriber momentum, despite war-related impacts on roaming revenues.

• Adjusted EBITDA declined by 1% after adjustments for universal fiber fund and war impacts, with group margin at 41.0%.

• Net debt decreased by NIS 290 million (5.8%) year-over-year to NIS 4.7 billion, with improved coverage ratio from 1.6x to 1.5x.

• Strategic initiatives included the sale of Bezeq Online for NIS 50 million and continued investment in fiber and 5G infrastructure.

• Free cash flow for Q3 was NIS 365 million, up 10.1% year-over-year, and over NIS 1 billion for the first nine months.

Financial highlights

• Core revenues reached NIS 2.02 billion, up 2.1% year-over-year, mainly from Fixed-Line growth.

• Adjusted EBITDA was NIS 915 million (41.0% margin), down 6.1% year-over-year.

• Adjusted net profit was NIS 309 million, down 13.4% year-over-year.

• CapEx was NIS 436 million (19.5% of revenues), up 7.4% year-over-year.

• Retail broadband ARPU rose 6% year-over-year to NIS 131.

Outlook and guidance

• CapEx and EBITDA expected to be slightly below guidance due to war impacts, but free cash flow will exceed expectations.

• CapEx cycle nearing completion with fiber rollout and satellite-to-IP migration; significant CapEx drop expected in 2025-2026.

• Dividend payout ratio increased from 50% to 70% in March; policy to be reviewed again in March.

• Midterm targets include 40% fiber take-up rate, retail ARPU above NIS 140, and EBITDA minus CapEx increase of NIS 400–500 million.

• Management reaffirmed commitment to complete fiber deployment, migrate TV to IP, and grow free cash flow via higher EBITDA and lower CapEx.