Bezeq The Israel Telecommunication (BEZQ) Q4 2023 earnings summary

Executive summary

• FY 2023 revenue reached NIS 9,103m, up 1.3%; adjusted EBITDA rose 2.2% to NIS 3,817m and adjusted net profit increased 11.0% to NIS 1,328m.

• Fiber adoption, 5G plans and business services supported growth despite war-related Q4 pressures; 2023 guidance was met.

• Fixed-line revenue reached a decade high, Pelephone service revenue excluding interconnect its highest since 2017, and yes revenue its highest since 2019.

Financial highlights

• FY operating profit was NIS 1,779m (+8.7%), net profit NIS 1,189m (+18.9%) and diluted EPS NIS 0.43 (+19.4%).

• Adjusted EBITDA margin was 41.9%; adjusted net profit was NIS 1,328m (+11.0%).

• Free cash flow was NIS 1,302m (-7.7%) and operating cash flow NIS 3,455m (-1.4%); free cash flow decline mainly reflected working-capital timing differences.

• Q4 revenue fell 0.6% to NIS 2,231m; operating profit rose 53.2% to NIS 380m and adjusted net profit rose 18.4% to NIS 296m.

Outlook and guidance

• 2024 guidance: adjusted EBITDA NIS 3.8bn, adjusted net profit NIS 1.2bn, gross CapEx NIS 1.8–1.9bn and 2.5m fiber homes passed.

• Mid-term targets: adjusted EBITDA CAGR of 1.5%–2.0% with 42%–44% margin, free cash flow CAGR of 7%–9%, and dividend payout of 70% of net profit, subject to maintaining an AA-group rating.

• Mid-term ARPU targets: broadband retail above NIS 140, Pelephone NIS 45–50 excluding interconnect, and yes NIS 155–160.

• Forecasts depend on competition, regulation, economic conditions, technology and the war’s duration, intensity and scope.