Bezeq The Israel Telecommunication (BEZQ) Q4 2024 earnings summary

Executive summary

• FY24 core revenue rose 1.3% to NIS 7.73bn; adjusted EBITDA fell 2.6% to NIS 3.72bn and adjusted net profit fell 4.7% to NIS 1.27bn.

• Q4 adjusted EBITDA rose 5.9% to NIS 974m and adjusted net profit rose 23.3% to NIS 365m, partly reflecting reversal of a universal fiber fund provision.

• Fiber, 5G plans and IPTV expanded; fiber reached 2.57m homes passed with 32% take-up at year-end.

• The dividend payout policy increased to 80% of semi-annual after-tax profit; a NIS 392m dividend, or NIS 0.14 per share, was recommended.

Financial highlights

• FY24 reported revenue was NIS 8.884bn, down 2.4%; operating profit was NIS 1.652bn, down 7.1%, and reported net profit was NIS 1.073bn, down 9.8%.

• FY24 free cash flow declined 2.4% to NIS 1.271bn; Q4 free cash flow fell 16.9% to NIS 260m as Q4 CapEx increased 4.5% to NIS 465m.

• Excluding estimated war-related roaming losses, FY24 adjusted EBITDA would have declined 1.8% and adjusted net profit 2.9%.

• FY24 diluted EPS was NIS 0.39, down 9.3%; adjusted EBITDA margin was 41.8%, versus 41.9% in FY23.

Outlook and guidance

• 2025 guidance: adjusted EBITDA NIS 3.7bn, adjusted net profit NIS 1.2bn, CapEx NIS 1.75bn and fiber deployment to 2.9m homes passed.

• Medium-term targets: core revenue CAGR 2%-3%, adjusted EBITDA CAGR ~2% with a 43%-45% margin, and free cash flow CAGR 7%-9%.

• Medium-term targets include NIS 500m growth in adjusted EBITDA less CapEx, retail broadband ARPU above NIS 140, Pelephone ARPU NIS 45-50 and yes subscriber ARPU NIS 190-195.

• Guidance is exposed to competition, regulation, economic conditions, technology and the duration, intensity and scope of the war.