Results were hit by lower profit and revenue at

Pelephonedue to increased competition.

Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) reported lower revenue and profit for the fourth quarter of 2013 and full year and expects even lower profit in 2014. Full year revenue was NIS 9.56 billion, down 7% from NIS 10.28 billion in 2012.

Reduction in overall group revenue was mainly due to a fall in revenue at mobile operator Pelephone Communications Ltd. because of fiercer competition in the market. The decrease was partly mitigated by a rise in revenue ISP and international calls operator Bezeq International.

Revenue in the fourth quarter of 2013 was NIS 2.41 billion, down 1.6% from NIS 2.45 billion in the corresponding quarter of 2012.

Operating profit in 2013 was NIS 2.82 billion down 7.3% from NIS 3.04 billion in 2012. Operating profit in the fourth quarter of 2013 was NIS 593 million, down 23.8% from NIS 778 million in the corresponding quarter of 2012.

Net profit attributable to Bezeq shareholders in 2013 was NIS 1.77 billion down 4.8% from NIS 1.86 billion in 2012. Bezeq sees net profit falling to NIS 1.6 billion in 2014.Net profit attributable to Bezeq shareholders in the fourth quarter of 2013 was NIS 352 million down 32.6% from NIS 522 million in the corresponding quarter of 2012.

Pelephone saw revenue in 2013 total NIS 3.81 billion down 14.7% from NIS 4.47 billion in 2012. Revenue in the fourth quarter was NIS 983 million down 4.3% from NIS 1.03 billion in the corresponding quarter of 2012.

Adjusted net profit in 2013 was NIS 563 million down 19.3% from NIS 698 million in 2012. Adjusted net profit in the fourth quarter was NIS 109 million down 18.7% from NIS 134 million in the corresponding quarter of 2012.

Pelephone CEO Gil Sharon’s salary cost was NIS 6 million in 2013, Bezeq CEO Stella Handler who assumed her position in March 2013 earned NIS 4.2 million, and Bezeq International CEO Itzik Benbenisti earned NIS 5.14 million in 2013.

Bezeq will distribute a NIS 802 million (NIS 0.29 per share) cash dividend to shareholders, which subject to shareholders approval, will be payable on April 23.

Handler said, “We are closing a year of significant achievements which further extend our leadership position in the Israeli market. Most notably we recruited a record 94,000 new Internet subscribers, and almost doubled the average Internet connection speed for our customers. 2013 was also marked by the acceleration of a strategic roll-out of our fiber-optic network, which now covers more than 400,000 homes from Kiryat Shmona to Eilat. This year, we will further speed up deployment, with the aim of covering almost 1 million households, representing 40% of Israel’s population, by year’s end.”

Bezeq chairman Shaul Elovitch said, “2013 was a challenging year for the Bezeq Group, but thanks to our focus on customer needs, innovative investments in infrastructure, and targeted, efficient management across all units, we managed to maintain and even expand our leadership position. Our diverse group operations enable us to better meet increasing competition in each segment. We expect the Minister of Communications to complete the regulatory reform in a fair and balanced manner in the coming period, which will allow continued development of market competition, while removing the barriers and restrictions imposed on the Bezeq Group.”

Published by Globes [online], Israel business news – www.globes-online.com – on March 6, 2014