Leader: Bezeq not cheap long-term
Analyst Sabina Podval: The delay in the wholesale market and more strong results should support the share in the short term.
6 August 13 11:07, Kobi Yeshayahou
On Monday, Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) reported a 9.4% drop in revenue to NIS 2.35 billion for the second quarter of 2013 from NIS 2.59 billion for the corresponding quarter of 2012, but a 15% rise in net profit to NIS 473 million, mainly due to a reduction in operating expenses to NIS 1.61 billion from NIS 1.85 billion for the corresponding quarter.In response, Leader Capital Markets analyst Sabina Podval says, “The financial statements were good, slightly above our profit forecast. The difference is partly due to the NIS 30 million drop in Pelephone Communications’expenses, caused by the change in the estimate for leasing antenna sites following an improvement in the contract terms. We continue to believe that stricter regulation in the landline market might put pressure on Bezeq’s future results, and we are waiting for developments in the arrangements for the wholesale market in the coming weeks.”As for Bezeq’s share price, Podval says that the delay in the original timetable for establishing the wholesale market, along with further strong results and high dividend yields should support the share in the short term. As for the long term, she writes: “We believe that in view of the expected changes in the sector and regulatory threats, the share price in the market is not low.”
Podval says that there was a larger-than-expected drop in Pelephone subscribers – 39,000 compared with a forecast of 25,000 – and that porting data indicated a drop of 20,000 subscribers. “We believe that part of the fall was from prepaid subscribers,” she writes.
On the fall in the cost of leasing sites, Podval writes, “The company’s results were favorably affected by the downward update by NIS 30 million in the estimate for leasing antenna sites. However, it should be noted that this was not a one-time drop, but will be a continuing reduction, because of improved lease contracts.”
Published by Globes [online], Israel business news – www.globes-online.com – on August 6, 2013
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