Bezeq Israeli Telecommunication Corp. (BEZQ) fell to the lowest this month after third-quarter profit of Israel’s largest land-line operator dropped as competition increased.
Bezeq shares fell as much as 3.7 percent before closing down 0.8 percent at 4.655 shekels in Tel Aviv, the lowest since Oct. 25. B Communications Ltd. (BCOM:US), which owns a 31 percent stake in Bezeq, lost 5.2 percent to 20.70 shekels. Bezeq’s shares were the fifth-biggest decliners on the benchmark TA-25 Index (TA-25), which was little changed at 1,211.57.
Bezeq’s quarterly profit dropped 38 percent to 342 million shekels ($88 million) as revenue fell to 2.49 billion shekels from 2.92 billion shekels a year earlier. It missed the 403 million-shekel median estimate of three analysts compiled by Bloomberg. Israeli telecommunications shares have been the worst performers on the index in the past year as the government introduced regulations to boost wireless and fixed-line competition.
“This was the first full quarter that reflected the higher competition in the cellular market that started in May,” Sabina Podval, an analyst at Leader Capital Markets (LDRC) Ltd. in Tel Aviv, wrote in an e-mailed note today. “We are concerned we will see an additional deterioration also in coming quarters.”
Tel Aviv-based Bezeq, which provides mobile phone services via its Pelephone Communications Ltd. unit, attributed the decline to regulatory changes and “intensifying competition,” particularly in cellular segment. It posted lower sales of mobile-phone handsets and average revenue per user fell 11 percent in the quarter, the company said. Pelephone lost 20,000 subscribers in the period.
Bezeq’s stock has dropped 40 percent in the past 12 months, making it the third-worst performer on the benchmark gauge after Cellcom Israel Ltd. (CEL:US) and Partner Communications Co. (PTNR), the country’s largest mobile-phone providers. Hot Telecommunication System Ltd. (HOT) and Golan Telecom entered the wireless market in May leading to greater price competition.
The company reiterated its full-year guidance, projecting revenue of between 10.2 billion shekels and 10.5 billion shekels and net profit between 1.75 billion shekels and 1.85 billion shekels.
Internet Gold-Golden Lines Ltd. (IGLD:US), which has a stake in Bezeq via B Communications, dropped 5.3 percent.
To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at email@example.com
To contact the editor responsible for this story: Alaa Shahine at firstname.lastname@example.org