Bezeq The Israeli Telecommunication (BEZQ) Q2 2024 earnings summary

Executive summary

• Strategic growth drivers included a 64% increase in fiber take-up, 28% growth in 5G subscribers, and a 6% rise in retail broadband ARPU, despite the ongoing conflict in Israel impacting results.

• Adjusted EBITDA fell 7.8% to NIS 910 million, mainly due to lower telephony revenues from regulatory reforms, project timing, and war-impacted roaming revenues.

• Free cash flow declined 25.2% to NIS 178 million in Q2, but grew 10.8% in H1 2024; last 12 months' free cash flow was ILS 1.4 billion.

• Board recommended a semi-annual dividend of NIS 407 million, a 4% increase year-over-year, maintaining a 70% payout policy.

• Launched electricity supply activities and a joint venture with Powergen; received a Platinum ESG rating from Maala.

Financial highlights

• Q2 2024 revenues were NIS 2.19 billion, down 4.7% year-over-year; core revenues declined 0.9% to NIS 1.94 billion.

• Adjusted EBITDA margin was 41.5%; adjusted net profit dropped 17.5% to NIS 292 million.

• Free cash flow for H1 2024 rose 10.8% to NIS 646 million.

• Net debt decreased by NIS 400 million (7%) year-over-year to NIS 5 billion.

• Dividend yield at 7%, supported by improved credit rating.

Outlook and guidance

• Guidance for the year reiterated, with no significant deviation expected.

• Focus remains on midterm free cash flow growth, completion of fiber rollout and 5G expansion, and maintaining high credit ratings.

• Mid-term targets include 40% fiber take-up, retail ARPU above NIS 140, and 80% 5G subscriber penetration.