Bezeq Israel Telecom reports flat quarterly profit

Bezeq Israel Telecom reported flat quarterly profit on Wednesday, and said it expects to reap benefits from an exponential expansion of data created by artificial intelligence (AI) platforms through more lucrative fibre optics growth.

Bezeq, Israel’s largest telecoms group, said it earned 321 million shekels ($88.5 million) excluding one-time items in the first quarter, versus 322 million a year earlier, partly hamstrung by a sharp drop in net income at its mobile phone unit Pelephone.

Revenue rose 2.4% to 2.31 billion, its highest quarterly revenue level since 2018, it said, driven by high demand for broadband internet.

Tobi Fischbein, Bezeq’s chief financial officer, said demand for ultra-fast internet has intensified in the wake of the COVID pandemic since families need strong bandwidth to work and play at home and that Bezeq was benefiting.

With AI growing rapidly, “it means that all telecom players with fibre and 5G will see an increased demand”, he told Reuters, citing a recent Bank of America report. “We will be ready for it.”

Bezeq is working with Nokia to provide broadband speeds of up to 25 gigabits per second (Gbps) and said it plans to offer 10 Gbps in 2024, reaching 25 Gbps by 2027. It currently offers a maximum of 2.5 Gbps.

Fibre “is going to be one of the best infrastructure investments that Bezeq has ever made,” Fischbein said, adding the cost per home in terms of deployment and installation was relatively low when compared to European telecommunication companies while eventually expecting its network to cover 85% of Israel.

Fischbein also said that he remained comfortable with Bezeq’s forecast of 1.2 billion shekels of net profit in 2023.

After a tough decade for telecom operators, particularly in cellular, he said there is now a balance and churn rates are declining.

Shares of Bezeq were up 0.3% to 5 shekels in afternoon Tel Aviv trading, but are nearly 18% lower so far in 2023. Reuters