Bezeq Telecom raises profit forecast, ups fibre rollout estimate

4:37 am Monday, August 01st, 2022

By Steven Scheer

JERUSALEM (Reuters) -Bezeq Israel Telecom on Monday raised its estimate for adjusted 2022 net profit to 1.1-1.2 billion shekels ($325-$354 million) from a prior forecast of 1.0-1.1 billion, while expecting to reach more homes with its fibre optics network.

Bezeq, Israel’s largest telecoms group, projects reaching 1.5 million homes with its fibre network in 2022, up from 1.4 million previously, it said in a regulatory filing in Tel Aviv.

Previously a government monopoly, Bezeq had been locked in a long battle with the industry regulator over the terms of its fibre deployment. It eventually reached a deal where it did not have to cover 100% of the country — which it believed was not financially viable — but rather 70%, and it began to deploy its network in March of 2021.

Smaller rivals Cellcom and Partner Communications are also ramping up fibre network deployment.

Israel’s Communications Ministry separately said on Monday that at the end of June, more than 1.6 million households have access to fibre, of which only about 670,000 households are paid subscribers.

Bezeq also raised its estimate for adjusted EBITDA to 3.65-3.75 billion shekels from 3.6-3.7 billion, while maintaining a forecast of 1.7-1.8 billion for capital expenses.

“The forecasts are based, among other things, on the group’s estimates regarding the structure of the competition in the communications market and the regulation of the sector, on the current economic situation in Israel, and accordingly – on the group’s ability to continue to implement its plans for 2022,” Bezeq said.

Bezeq shares were 1.4% higher in morning trade in Tel Aviv versus declines in the broader market. They have risen 13% so far in 2022 to outpace broader indexes.

Bezeq “remains our preferred play in our Israeli telco coverage universe,” said Barclays analyst Tavy Rosner, who rates the shares as “overweight”. “We see Bezeq well positioned to deliver sustainable EBITDA growth, driven by the ongoing FTTH (fibre to the home) and 5G transition tailwinds.”

Bezeq is due to issue second-quarter results on August 10.

($1 = 3.3857 shekels)

(Reporting by Steven Scheer. Editing by Jane Merriman)