Bezeq's Q3 2024: Navigating Growth Amid Challenges

Bezeq The Israeli Telecommunication Corp Ltd (BZQIF) recently released its Q3 2024 earnings call, highlighting a mix of strong subscriber growth and strategic financial moves, along with challenges in EBITDA and cash flow. As the leading communications group in Israel, Bezeq is at the forefront of the digital revolution, offering a wide range of telecommunications services, including broadband internet, cloud and digital services, and multi-channel TV.

In Q3 2024, Bezeq reported a 2% increase in core revenues, driven by a 4% growth in Bezeq Fixed-Line. The company achieved a 50% year-over-year increase in fiber subscribers and a 25% growth in 5G subscriber plans. Bezeq has reached 2.5 million home passes with a 31% take-up rate, surpassing expectations. The strategic sale of Bezeq Online for ILS50 million contributed to financial efficiency, while net debt decreased by ILS290 million or 6% year-over-year, improving the coverage ratio from 1.6 times to 1.5 times.



However, the company faced challenges in adjusted EBITDA, which was negatively impacted by the reversal of the Universal Fiber Fund and the war's impact on roaming revenues. Free cash flow declined this quarter due to an increase in CapEx, and the TV sector remains highly competitive with a 1% decline in TV subscribers. Adjusted net profit decreased by 2.6% after adjustments for the universal fund and roaming revenue impacts. Bezeq International faced declines in revenues and profitability due to regulatory reforms and lower international long-distance revenues.



Bezeq's CFO attributed the challenges to the war's impact on roaming revenues and the reversal of the Universal Fiber Fund provision. The company expects to complete its CapEx cycle with the end of the fiber project and migration from satellite to IP, leading to a significant drop in CapEx in the second half of next year and into 2026. Bezeq has also increased its dividend payout from 60% to 70% and is considering further increases in the future.

In conclusion, Bezeq's Q3 2024 earnings call indicates a company navigating growth amidst challenges. With strong subscriber growth in fiber and 5G, and strategic financial moves, Bezeq is well-positioned to capitalize on the digital revolution. However, the company must address the challenges in EBITDA and cash flow, and continue to innovate to maintain its competitive edge in the Israeli telecommunications market. As the digital revolution continues, Bezeq's ability to adapt and grow will be crucial for its long-term success.