Aug.06, 2012 | 4:14 AM–Bezeq’s core business suffered serious setbacks in the second quarter, and competition is expected to heat up later this year. But the company’s landline operations weren’t hit as badly as expected, and Bezeq’s key competitors probably did worse.
As reported in TheMarker on Friday, Bezeq’s second-quarter net profit dropped more than 29% to NIS 415 million.
Taking a closer look, it’s clear that the biggest blow at landline was a sharp drop in cash flow. The group’s main cash generator provided between NIS 210 million and NIS 430 million during each of the last six quarters in free cash flow.
In the second quarter, cash from operating activities less net investments fell to just NIS 160 million. The reason is clear: A net attrition of 33,000 subscribers.
In broadband Internet, the company actually added 15,000 subscribers, but average revenue per user dropped NIS 4 to NIS 80. Although Bezeq invested heavily in new infrastructure and Internet speed upgrades, mounting competition from HOT is apparently forcing rates down.
Last week TheMarker reported that Bezeq is close to finalizing a deal for selling landlines to Partner Communications at wholesale rates. This is expected to be the opening volley in fierce competition in the landline market, which will put added pressure on Bezeq’s profitability…Read More>>