BEZEQ GROUP REPORTS THIRD QUARTER 2012 FINANCIAL RESULTS

BEZEQ GROUP REPORTS  THIRD QUARTER 2012 FINANCIAL RESULTS 
TEL AVIV, ISRAEL -- (Marketwire) -- 11/07/12 --  
Tel Aviv, Israel - November 7, 2012 - Bezeq - The Israel
Telecommunication Corp., Ltd. (TASE: BEZQ), Israel's leading
telecommunications provider, today
announced its financial results
for the three months ended September 30, 2012.
Details regarding the
investor conference call and webcast to be held tomorrow
are included
later in this press release. 


 
+----------------------------------------------------------------
---------+
|     Bezeq Group (consolidated)      Q3 2012 Q3 2011           Change    |
|                                                                         |
|                                     (NIS millions)                      |
|                                                                         |
|Revenues                               2,494   2,917               -14.5%|
|                                                                         |
|Operating profit                         667     944               -29.3%|
|                                                                         |
|EBITDA                                 1,026   1,301               -21.1%|
|                                                                         |
|EBITDA margin                          41.1%   44.6%                     |
|                                                                         |
|Net profit attributable to Company                                       |
|shareholders                             342     550               -37.8%|
|                                                                         |
|Diluted EPS (NIS)                       0.13    0.20               -35.0%|
+-------------------------------------------------------------------------+
|                                                                         |
|Cash flow from operating activities    1,024     882                16.1%|
|                                                                         |
|Payments for investments, net            270     374               -27.8%|
|                                                                         |
|Free cash flow (1)                       754     508                48.4%|
|                 
                                                        |
+-------------------------------------------------------------------------+
|Net debt/EBITDA (end of period) (2)     1.64    1.24                     |
|                                                                         |
|Net debt/shareholders' equity (end                                       |
|of period)                              3.69    2.93                     |
+-------------------------------------------------------------------------+

 
(     ) 
(1) Free cash flow is defined as cash flows from operating
activities less net
 payments for investments. 
(2) EBITDA in this calculation refers to the trailing twelve
months. 
Shaul Elovitch, Bezeq's Chairman, stated, "Our third quarter 2012
financial results reflect the profound changes in the Israeli
communications market and
the increased competition in all sectors of
our operations. I am confident that
we remain well positioned to
succeed in these challenging times, with leading
companies in all key
segments of the communications market, strong cash flow and the most
advanced infrastructures." 
Alan Gelman, Chief Financial Officer and Deputy CEO of Bezeq,
commented, "Our
Group performance was significantly influenced by
comprehensive regulatory changes and intensifying competition in the
various areas of our operations,
particularly in the cellular
segment. Looking forward, we believe that the strength of our diverse
range of communications offerings, supporting consumer
and business
customers alike, will continue to provide a market leading
competitive advantage.  At the same time, we are focused on improving
our performance by means of group-wide efficiency and cost-savings
initiatives which
are expected to influence our operations in the
short to medium term. 
In October we successfully raised 500 million shekels through bank
financing in order to further strengthen our financial flexibility.
Combined with significant
improvements in operating cash flow as well
as free cash flow generation, we
intend to maximize the proceeds in
part through product innovation, technology
and by continuing to make
strategic investments in advanced communications infrastructures to
meet the evolving communications needs of our customers,"
concluded
Mr. Gelman. 
Bezeq Group Results (Consolidated) 
Revenues in the third quarter of 2012 amounted to NIS 2.49 billion
compared with
NIS 2.92 billion in the corresponding quarter of 2011, a
decrease of 14.5%. The
reduction was due to a decrease in revenues
from the cellular segment as a result of lower sales of cellular
handsets and the erosion of revenues from cellular services. 
Operating profit in the third quarter of 2012 amounted to NIS 667
million, compared with NIS 944 million in the corresponding quarter of
2011, a decrease
of 29.3%.  Earnings before interest, taxes,
depreciation and amortization (EBITDA) in the third quarter of 2012
amounted to NIS 1.03 billion (EBITDA margin of 41.1%), compared with
NIS 1.30 billion (EBITDA margin of 44.6%) in the corresponding
quarter of 2011, a decrease of 21.1%. Net profit attributable
to
Bezeq shareholders in the third quarter of 2012 amounted to NIS
342 million compared with NIS 550 million in the corresponding
quarter of 2011, a decrease
of 37.8%.  The decline in profitability
metrics was primarily due to a decrease
in profitability in the
cellular segment as well as lower capital gains from
real estate and
copper sales in the fixed-line segment compared to the corresponding
quarter of 2011. 
Cash flow from operating activities in the third quarter of 2012
amounted to NIS 1.02 billion compared with NIS 882 million in the
corresponding quarter of 2011, an increase of 16.1% primarily due to
improved working capital in the cellular segment.  Free cash flow in
the third quarter of 2012 amounted to NIS
754 million compared with
NIS 508 million in the corresponding quarter of 2011,
an increase of
48.4%.  The increase in free cash flow was due to an increase in cash
flow from operating activities as well as the completion of major
infrastructure projects initiated in prior years. 
Gross capital expenditures (CAPEX) in the third quarter of 2012
amounted to NIS
346 million compared with NIS 437 million in the
corresponding quarter of 2011,
a decrease of 20.8%. The Group's CAPEX
to consolidated sales ratio in the third
quarter of 2012 was 13.9%,
compared with 15.0% in the corresponding quarter of
2011. 
As of September 30, 2012, gross financial debt of the Group was NIS
8.94 billion, compared with NIS 9.61 billion as of September 30, 2011.
The net financial debt of the Group was NIS 7.19 billion compared
with NIS 5.99 billion
as of September 30, 2011. At the end of
September 2012, the Group's net financial debt to EBITDA ratio was
1.64, compared with 1.24 as of September 30, 2011. 
2012 Outlook 
The Bezeq Group reiterates its full-year guidance, projecting
revenues of between NIS 10.2 billion and NIS 10.5 billion, net profit
attributable to shareholders of between NIS 1.75 billion and NIS 1.85
billion and EBITDA between
NIS 4.4 billion and NIS 4.5 billion. 
Free cash flow in 2012 is expected to improve materially compared to
2
011 and to amount to above NIS 2.5 billion.  This is primarily due to
the improvement in
working capital and the progress made in major
infrastructure projects. 
We are prepared to compete with the challenges in the industry and
are implementing streamlining measures which are expected to reduce
the impact of
the cellular segment on the Bezeq Group.  These
measures are expected to influence our operations in the short to
medium term. 
Bezeq Fixed-Line Results 


 
  * Internet subscribers increased to 1.15 million, up 4.8% versus a year
    ago
  * Average broadband speed increased to 9.0 mega bits per second (Mbps),
    up 50% versus a year ago

 
Avi Gabbay, Bezeq CEO, stated, "Our strategy of driving revenues from
Internet
and data operations, alongside the streamlining of our
operations, continues to prove itself especially in a strengthening
yet fiercely competitive market. The
significant rise in the number
of Internet subscribers helped mitigate the impact of the decline in
the number of telephony subscribers. We expect that the reform of the
wholesale market alongside the cancelation of structural separation
will benefit both consumers and operators." 
Revenues in the third quarter of 2012 amounted to NIS 1.15 billion
compared with
NIS 1.19 billion in the corresponding quarter of 2011, a
decrease of 3.1%. The
decrease in revenues was primarily due to a
9.0% reduction in telephony revenues, partially offset by growth in
Internet and data revenues compared to
the corresponding quarter of
2011. This increase stemmed primarily from the continued upgrading of
broadband Internet speeds, which increased by 50% compared with the
corresponding quarter of 2011, bringing the average
customer
broadband Internet speed up to 9.0 Mbps. 
Operating profit in the third quarter of 2012 amounted to NIS 419
million compared with NIS 546 million in the corresponding quarter of
2011, a decrease
of 23.3%. EBITDA in the third quarter of 2012
amounted to NIS 604 million (EBITDA margin of 52.6%) compared with
NIS 726 million (EBITDA margin of 61.2%)
in the corresponding quarter
of 2011, a decrease of 16.8%.  Net profit in the
third quarter of
2012 amounted to NIS 246 million compared with NIS 311 million
in the
corresponding quarter of 2011, a decrease of 20.9%. The decrease in
profitability metrics was primarily due to lower capital gains from
real estate
and copper sales compared to the corresponding quarter of
2011. 
Bezeq strengthened its status as the leader in Internet services in
Israel, with
the number of subscribers rising by 4.8% compared with
the corresponding quarter
in 2011 to reach 1.153 million at the end
of the third quarter of 2012. During
the quarter the Company
recruited 17,000 net Internet subscribers compared with
12,000 in the
corresponding quarter of 2011. Average revenue per user (ARPU)
from
broadband Internet services amounted to NIS 80 per month in the third
quarter of 2012, compared to NIS 81 in the corresponding quarter in
2011. 
The number of telephony access lines at the end of the third quarter
of 2012 was 2.3 million, a decrease of 2.7% compared with the
corresponding quarter of 2011. Average monthly revenue per line
(ARPL) was NIS 73, compared with NIS 78
in the corresponding quarter
of 2011. 


 
+----------------------------------------------------------------
---------+
|        Bezeq Fixed-Line          Q3 2012 Q3 2011            Change      |
|                                                                         |
|                                  (NIS millions)                         |
|                                                                         |
|Revenues                            1,149   1,186                   -3.1%|
|                                                                         |
|Operating profit                      419     546                  -23.3%|
|                                                                         |
|EBITDA                                604     726                  -16.8%|
|                                                                         |
|EBITDA margin                       52.6%   61.2%                        |
|                                                                         |
|Net profit (1)                        246     311                  -20.9%|
+-------------------------------------------------------------------------+
|                                                                         |
|Cash flows from operating                                                |
|activities                            470     641                  -26.7%|
|                                                                         |
|Payments for investments, net         153     200                  -23.5%|
|                                                                         |
|Free cash flow (2)                    317     441                  -28.1%|
|                                                                         |
+-------------------------------------------------------------------------+
|Number of active subscriber lines                                        |
|(end of period, in thousands) (3)   2,299   2,363                   -2.7%|
|                                                                         |
|Average monthly revenue per line                                         |
|(NIS) 4                                73      78                   -6.4%|
|                                                                         |
|Number of outgoing usage minutes                                         |
|(millions)                          2,125   2,482                  -14.4%|
|                                                                         |
|Number of incoming usage minutes                                         |
|(millions)                          1,590   1,602                   -0.7%|
|                                                                         |
|Churn rate (%)( 5)                   4.2%    2.8%                        |
|                                                                         |
|Number of broadband internet                                             |
|subscribers (end of period, in                                           |
|thousands)                          1,153   1,100                    4.8%|
|                                                                         |
|Average monthly revenue per                                              |
|broadband internet subscriber                                            |
|(NIS)                                  80      81                   -1.2%|
|                                                                         |
|Average broadband speed per                                              |
|subscriber (end of period, Mbps)      9.0     6.0                   50.0%|
+-------------------------------------------------------------------------+

 
(1) Excluding share in profits/losses of equity-accounted investees. 
(2) Free cash flow is defined as cash flows from operating
activities less net
 payments for investments. 
(3) Inactive subscribers are those whose lines have been physically 
disconnected (except for a subscriber in the first three months of
collection
 proceedings). 
(4) Not including revenues from data communications and
transmissions  services, internet services, services to communications
providers, and  contract and other services.  Based on average
subscribers for the period. 
(5) Churn rate is calculated according to the number of telephone
subscribers
 who have disconnected from the Company's services during
the period, divided
 by the average number of telephone subscribers
during the period. 
Pelephone Results 


 
  * Revenues in the third quarter of 2012 amounted to NIS 1.05 billion
    compared with NIS 1.42 billion in the corresponding quarter of 2011
    due to a decrease in the number of handsets sold and a reduction of
    tariffs

 
Gil Sharon, CEO of Pelephone, stated, "Our financial results were
influenced by changes in the cellular sector as well as increased
competition. Profitability
in the third quarter decreased due to lower
revenues from the sale of equipment
and the continued reduction of
tariffs during the past year.  As part of our
preparations for the
entry of the new competitors, we were the first to offer an unlimited
plan and adapt to the changing market environment. As a result, in
the third quarter, we were the incumbent carrier that attracted the
most customers
and experienced the lowest level of churn. In recent
months we have introduced
many efficiency measures such as the move
to a central cellular repair laboratory, consolidation of customer
service centers, merger of the content and marketing divisions, and
more. These changes have led to, among other things,
savings in
expenses and personnel as well as moderated the decline in
profitability. In addition, the decision to host two of the new
communications
operators, HOT Mobile and Rami Levy, on our high speed
network proved to be the
right business decision and has contributed
additional revenues." 
Total revenues in the third quarter of 2012 amounted to NIS 1.05
billion compared with NIS 1.42 billion in the corresponding quarter of
2011, a decrease
of 26.2%. 
Revenues from services in the third quarter of 2012 amounted to NIS
816 million
compared with NIS 914 million in the corresponding quarter
of 2011, a decrease
of 10.7%. The decrease was primarily due to
tariff erosion as a result of increased competition in the market,
offset by wholesale revenues from new communications operators for
their hosting on Pelephone's network. 
Revenues from equipment in the third quarter of 2012 amounted to NIS
233 million
compared with NIS 507 million in the corresponding quarter
of 2011, a decrease
of 54.0%. The decrease was due to increased
competition in the market which led
to a reduction in the number of
handsets sold compared with the corresponding
quarter of 2011. 
Operating profit in the third quarter of 2012 amounted to NIS 199
million compared with NIS 342 million, a decrease of 41.8%. EBITDA in
the third quarter
of 2012 amounted to NIS 329 million (EBITDA margin
of 31.4%), compared with NIS
481 million in the corresponding quarter
of 2011 (EBITDA margin of 33.8%), a
decrease of 31.6%.  Net profit in
the third quarter of 2012 amounted to NIS 154
million compared with
NIS 263 million in the corresponding quarter of 2011, a
decrease of
41.4%. The decrease in Pelephone's profitability metrics was
primarily due to the reduction in equipment revenues and the
continued reduction
of tariffs during the year as a result of the
regulatory changes and the entrance of new operators in the second
quarter of 2012. 
Cash flow from operating activities in the third quarter of 2012
amounted to NIS 490 million compared with NIS 168 million in the
corresponding quarter of 2011.  The increase was primarily due to an
improvement in working capital as a result of a decrease in the sale
of handsets as well as from the factoring in of certain receivables
from previously purchased handsets paid for in installments. 
Total Pelephone subscribers decreased sequentially by 20,000 during
the third
quarter of 2012 and numbered 2.839 million as of September
30, 2012, compared
with 2.842 million on September 30, 2011. 
Average monthly revenue per user (ARPU) in the third quarter of 2012
was NIS
95, compared with NIS 99 sequentially and NIS 107 in the
corresponding quarter
of 2011.  In the second and third quarters of
2012 Pelephone's ARPU includes
revenues from new communications
operators. 


 
+----------------------------------------------------------------
---------+
|         Pelephone          Q3 2012       Q3 2011               Change   |
|                                                                         |
|                                   (NIS millions)                        |
|                                                                         |
|Total revenues                1,049                1,421           -26.2%|
|                                                                         |
|Service revenues                816                  914           -10.7%|
|                                                                         |
|Equipment revenues              233                  507           -54.0%|
|                                                                         |
|Operating profit                199                  342           -41.8%|
|                                                                         |
|EBITDA                          329                  481           -31.6%|
|                                                                         |
|EBITDA margin                 31.4%                33.8%                 |
|                                                                         |
|Net profit                      154                  263           -41.4%|
+-------------------------------------------------------------------------+
|                                                                         |
|Cash flows from operating                                                |
|activities                      490                  168           191.7%|
|                                                                         |
|Payments for investments,                                                |
|net                              84                   71            18.3%|
|                                                                         |
|Free cash flow (1)              406                   97           318.6%|
|                                                                         |
+-------------------------------------------------------------------------+
|Total subscribers (end of                                                |
|period, in thousands) (2,                                                |
|6)                            2,839                2,842            -0.1%|
|                                                                         |
|Average revenue per user                                                 |
|(ARPU, NIS) (3, 6)               95                  107           -11.2%|
|                                                                         |
|Average monthly minutes of                                               |
|use per subscriber (MOU)                                                 |
|(4, 6)                          425                  385            10.4%|
|                                                                         |
|Churn rate  (5, 6)             6.7%                 6.1%                 |
+-------------------------------------------------------------------------+

  
(1) Free cash flow is defined as cash flows from  operating
activities less net payments for investments. 
(2) Subscriber data includes Pelephone subscribers (excluding
subscribers of
 operators  that Pelephone hosts on its network) and do
not include inactive
 subscribers who are connected to Pelephone's
services for six months or more.
 An inactive subscriber is one who
in the past six months has not rece
ived or
 made at least one call or
who has not paid for Pelephone's services. 
(3) Average monthly revenue per subscriber is calculated by dividing
average
 monthly revenue from cellular services, both from Pelephone
subscribers and
 from other communications operators, including
revenues from cellular  operators who use Pelephone's network (from
whom revenues commenced in 2012),
 and repair and warranty services
in the period by average Pelephone active  subscribers in the same
period. 
(4) Average monthly use per subscriber (in minutes) is calculated
according to  a monthly average of total outgoing and incoming
minutes in the period,  divided by the average total number of active
subscribers in the same period. 
(5 )Churn rate is calculated according to the proportion of
subscribers who
 have disconnected from the Company's services and
subscribers who have become
 inactive during the period, divided by
the total number of average active  subscribers during the period. 
(6 )In the 2011 report,due to the increased transition of
subscribers to  prepaid plans in the first months of the year, after
reduction of the exit  fees, Pelephone decided not to count as
"active" subscribers those who made no  calls during the fourth
quarter. As a result, Pelephone deleted approximately
 91,000
subscribers. They were deleted retroactively from each quarter in
2011
 in which they were transferred to prepaid plans. Consequently,
the subscriber
 data, ARPU, MOU and churn rate were retroactively
adjusted in each quarter of
 2011 
Bezeq International Results 


 
  * Net recruitment of Internet subscribers increased 8% in the third
    quarter of 2012 compared with the corresponding quarter in 2011, driven
    by the deployment of the new submarine communications cable
    infrastructure and the Power NGN high speed network
  * Bezeq International maintained its high level of EBITDA of NIS
    89 million in the third quarter of 2012, similar to the corresponding
    quarter a year ago, for an EBITDA margin of over 26%

 
Itzik Benbenisti, CEO of Bezeq International, stated, "We successfully
maintained sequential revenue and profitability levels despite the
impact of
competition and the regulatory imbalance which characterize
the industry. Our
successes and achievements can be attributed to our
unique advantages which support our continuing growth. These
advantages are primarily reflected in the
differentiation of products
and technologies which have been enabled by the submarine cable set
up at the beginning of the year as well as our outstanding
quality of
service." 
Revenues in the third quarter of 2012 amounted to NIS 339 million
compared with
NIS 351 million in the corresponding quarter of 2011, a
decrease of 3.5%. The
decrease in revenues was primarily due to the
reduction of revenues from international calls offset by the
continued growth in sales of the Company's
Internet services
delivered across the submarine cable infrastructure as well as the
Power NGN high speed network, which were launched at the beginning of
the
year. 
Operating profit in the third quarter of 2012 amounted to NIS 55
million compared with NIS 61 million in the corresponding quarter of
2011, a  decrease of 10.5%.  Net profit in the third quarter of 2012
amounted to NIS 40 million compared with NIS 46 million in the
corresponding quarter of 2011, a decrease of 12.3%. The decrease in
operating profit and net profit was primarily due to an
increase in
the company's depreciation expenses as a result of investments in
the
submarine cable and additional investments in Information and
Communication
Technology (ICT). 
EBITDA in the third quarter of 2012 amounted to NIS 89 million
(EBITDA margin of 26.4%) in line with the corresponding quarter of
2011 (EBITDA margin of 25.5%),
which is a direct reflection of
increased operating efficiency within the Company. 
Capital expenditures (CAPEX), in the third quarter of 2012 amounted
to NIS 29
million compared with NIS 85 million in the corresponding
quarter of 2011, a
decrease of 65.9%.  The decrease in CAPEX was
primarily due to the completion of the investment in the submarine
cable from Israel to Europe in the first quarter
of 2012. 
Cash flow from operating activities in the third quarter of 2012
amounted to NIS 63 million compared with NIS 57 million in the
corresponding quarter of 2011, an increase of 9.9%. The increase was
primarily due to positive changes in
working
capital. 


 
+----------------------------------------------------------------
---------+
|       Bezeq International         Q3 2012 Q3 2011            Change     |
|                                                                         |
|                                   (NIS millions)                        |
|                                                                         |
|Revenues                               339     351                  -3.5%|
|                                                                         |
|Operating profit                        55      61                 -10.5%|
|                                                                         |
|EBITDA                                  89      89                       |
|                                                                         |
|EBITDA margin                        26.4%   25.5%                       |
|                                                                         |
|Net profit                              40      46                 -12.3%|
+-------------------------------------------------------------------------+
|                                                                         |
|Cash flows from operating                                                |
|activities                              63      57                   9.9%|
|                                                                         |
|Payments for investments, net           29      92                 -68.8%|
|                                                                         |
|Free cash flow (1)                      35    (34)                       |
|                                                                         |
+-------------------------------------------------------------------------+
 
 (1) Free cash flow is defined as cash flows from operating activities less
net
 payments for investments.
 
                                  yes Results

 
  * yes subscribers at the end of the third quarter of 2012 numbered 
581,000, compared with 582,000 at the end of the sequential quarter 
and 585,000 at the end of the corresponding quarter in 2011 


 
Ron Eilon, CEO of yes, stated, "We have once again proven our ability
to compete
in a saturated and changing market while continuing to show
improvement in our
delivery capabilities.  It is clear from the third
quarter results that we are
paying the price of a regulatory
environment which restricts our ability to compete against operators
who are allowed to offer bundled communication packages whereby yes
is prohibited from doing so.  Until a level regulatory playing field
is in place for all providers, we will continue to offer the highest
quality standalone TV services."
 
Revenues in the third quarter of 2012 amounted to NIS 403 million
compared with
NIS 405 million in the corresponding quarter of 2011, a
decrease of 0.7%. The
moderate decrease in revenues was due to a
decline in revenues from content partially offset by growth in
revenues from advanced services.
 
Operating profit in the third quarter of 2012 amounted to NIS 54
million compared with NIS 63 million in the corresponding quarter of
2011, a decrease of 14.8%.  EBITDA in the third quarter of 2012
amounted to NIS 118 million (EBITDA
margin of 29.4%) compared with
NIS 137 million (EBITDA margin of 33.9%) in the
corresponding quarter
of 2011, a decrease of 13.8%.  The decrease in profitability metrics
was primarily due to an i
ncrease in content and sales expenses.
 
Net loss and profit before finance expenses to shareholders and taxes
were influenced by an increase in finance expenses due to an increase
in net financial debt. Net loss in the third quarter of 2012 amounted
to NIS 119 million compared with a loss of NIS 76 million in the
corresponding quarter of
2011, an increase of 56.4%. Profit before
finance expenses to shareholders and
taxes in the third quarter of
2012 amounted to NIS 2 million compared with NIS
21 million in the
corresponding quarter of 2011.
 
Cash flow from operating activities in the third quarter of 2012
amounted to NIS 83 million compared with NIS 134 million in the
corresponding quarter of 2011, a decrease of 38.5% primarily due to
changes in working capital.  Free cash flow
in the third quarter of
2012 amounted to a negative NIS 4 million compared with
NIS 67
million in positive free cash flow in the corresponding quarter of
2011.
 
Capital expenditures (CAPEX), in the third quarter of 2012 amounted
to NIS 102
million compared with NIS 68 million in the corresponding
quarter of 2011, an
increase of 50.0%.  The increase in CAPEX was
primarily due to the purchase of
advanced set top boxes as a result
of the growing demand.
 
ARPU in the third quarter of 2012 amounted to NIS 231 compared with
NIS 232 in
the corresponding quarter of 2011, a decrease of 0.4% due
to the timing of marketing campaigns.
 
yes's subscriber base at the end of the third quarter of 2012 reached
581,000
compared with 585,000 at the end of the third quarter of
2011, a decrease
of
0.7%.

 
+----------------------------------------------------------------
---------+
|                                                                         |
|               yes                Q3 2012 Q3 2011            Change      |
|                                                                         |
|                                  (NIS millions)                         |
|                                                                         |
|Revenues                              403     405                   -0.7%|
|                                                                         |
|Operating profit                       54      63                  -14.8%|
|                                                                         |
|EBITDA                                118     137                  -13.8%|
|                                                                         |
|EBITDA margin                       29.4%   33.9%                        |
|                                                                         |
|Net profit (loss)                   (119)    (76)                  -56.4%|
|                                                                         |
+-------------------------------------------------------------------------+
|Cash flows from operating                                                |
|activities                             83     134                  -38.5%|
|                                                                         |
|Payments for investments, net          87      67                   28.8%|
|                                                                         |
|Free cash flow (1)                    (4)      67                 -106.0%|
+-------------------------------------------------------------------------+
|                                                                         |
|Number of subscribers (end of                                            |
|period, in thousands) (2)             581     585                   -0.7%|
|                                                                         |
|Average revenue per user (ARPU,                                          |
|NIS) (3)                              231     232                   -0.4%|
|                                                                         |
+-------------------------------------------------------------------------+ 


 
(1 )Free cash flow is defined as cash flows from operating activities
less  net  payments for investments.
 
 (2 )Subscriber - one household or small business customer. For a
business  customer with numerous intake points or decoders (such as a
hotel, kibbutz or
 gym), the number of subscribers is calculated by
dividing the total payment
 received from the business customer by
the average revenue from a small  business customer.
 
 (3) ARPU includes total yes revenues (content and equipment, premium
channels,
 advanced services, and others) divided by average
subscribers for the period.
 
 
 
 
 
Conference Call & Webcast Information
 
Bezeq will conduct a conference call hosted by Mr. Shaul Elovitch,
Bezeq Chairman and Mr. Alan Gelman, Bezeq Chief Financial Officer and
Deputy CEO, on
Thursday, November 8, 2012, at 4:00 PM Israel Time /
9:00 AM Eastern Time. Participants are invited to join the live
conference call by dialing:
 
                  International Phone Number: + 972-3-918-0644
 
                        Israel Phone Number: 03-918-0644
 
A live webcast of the conference call will be available on the
investor relations section of the Bezeq corporate website at
www.bezeq.co.il. Please visit the website at least 15 minutes early
to register for the webcast and download any necessary audio
software.
 
A webcast replay will be made available on the investor relations
section of the Bezeq corporate website. An automated telephone replay
will also be available
approximately three hours after the completion
of the live call through Wednesday, November 14, 2012. Participants
are invited to listen to the conference call replay by dialing:
 
                  International Phone Number: + 972-3-925-5921
 
                        Israel Phone Number: 03-925-5921
 
About Bezeq The Israel Telecommunication Corp.
 
Bezeq is Israel's leading telecommunications service provider.
Established in
1984, the Company has led Israel into the new era of
communications, based on
the most advanced technologies and services.
Bezeq and its subsidiaries offer
the full range of communications
services including domestic, international and
cellular phone
services; broadband Internet, and other data communications;
satellite-based multi-channel TV; and corporate networks.
 
For more information about Bezeq please visit the corporate website
at www.bezeq.co.il.
 
This press release contains general data and information as well as
forward looking statements about Bezeq. Such statements include
expressions of management's expectations about new and existing
programs, opportunities, technology and market conditions. Although
Bezeq believes its expectations are
based on reasonable assumptions,
these statements are subject to numerous risks
and uncertainties.
These statements should not be regarded as a representation
that
anticipated events will occur or that expected objectives will be
achieved.  These forward-looking statements are made only as of the
date hereof
and the Company assumes no obligation to update any
forward-looking statement In addition, the realization and/or
otherwise of the forward-looking information
will be affected by
factors that cannot be assessed in advance, and which are
not within
the control of the Corporation, including the risk factors that
are
characteristic of its operations, and developments in the general
environment,
and external factors and the regulation that affects the
Corporation's operations.
 
This press release contains partial information from the public
reports of Bezeq
under the Israeli Securities Law 5728-1968 (the
"Securities Law"), which reports
can be accessed at the Israeli
Securities Authority's website, www.magna.isa.gov.il. A review of
this press release is not a substitute for a review of the detailed
reports of Bezeq under the Securities Law and is not meant to replace
or qualify them; rather, the press release is prepared merely
for the
convenience of the reader, with the understanding that the d
etailed
reports are being reviewed simultaneously.  No representation is made
as to the
accuracy or completeness of the information contained
herein.
 
This press release does not constitute an offer or invitation to
purchase or
subscribe for any securities, and neither this
presentation nor anything contained herein shall form the basis of or
be relied upon in connection with
any contract or commitment
whatsoever.
 
 
 
 
              "Bezeq" The Israel Telecommunication Corp., Limited  
                  Condensed Consolidated Income Statements
 
                     Nine months ended      Three months ended  Year
ended
 
                       September 30            September 30    
December 31                 
----------------------------------------------------------            
         2012        2011        2012        2011      2011          
       ----------------------------------------------------------    
              (Unaudited) (Unaudited) (Unaudited) (Unaudited)
(Audited)                 
----------------------------------------------------------            
          NIS         NIS         NIS         NIS        NIS         
           million     million     million     million     million
 
 
 
 
 Revenues               7,829         8,723       2,494  2,917     
 11,373
---------------------------------------------------------------------------
 
 
 
 Operating  expenses
---------------------------------------------------------------------------
 
Depreciation and  amortization           1,075         1,040        
359    357       1,395
---------------------------------------------------------------------------
 
Salaries               1,527         1,612         511    540       
2,103
---------------------------------------------------------------------------
 
General and  operating  expenses               2,976         3,445   
     963  1,182        4,494
---------------------------------------------------------------------------
 
Other operating  expenses  (income), net           (12)            82
        (6)  (106)          139
---------------------------------------------------------------------------
 
                       5,566         6,179       1,827  1,973       
8,131
---------------------------------------------------------------------------
 
-----------------------------------------------------------------------
----
 Operating profit       2,263         2,544         667    944  
     3,242
---------------------------------------------------------------------------
 
Finance expenses  (income)
---------------------------------------------------------------------------
 
Finance expenses         506           445         181    186        
 599
---------------------------------------------------------------------------
 
Finance income         (418)         (277)       (126)  (100)       
(389)
---------------------------------------------------------------------------
 
Finance  expenses, net             88           168          55     86
         210
---------------------------------------------------------------------------
 
-----------------------------------------------------------------------
----
 Profit after  finance expenses  (income), net          2,175   
     2,376         612    858        3,032
---------------------------------------------------------------------------
 
Share in losses  of equity-  accounted  investees                233 
         203          92     66          216
---------------------------------------------------------------------------
 
Profit before  income tax             1,942         2,173         520
   792        2,816
---------------------------------------------------------------------------
 
Income tax               597           633         178    243        
 755
---------------------------------------------------------------------------
 
Profit for the  period                 1,345         1,540        
342    549        2,061
---------------------------------------------------------------------------
 
 
 
 
 
              "Bezeq" The Israel Telecommunication Corp., Limited
              Condensed Consolidated Income Statements (Continued)
 
                     Nine months ended      Three months ended  Year
ended
 
                       September 30            September 30    
December 31                  
---------------------------------------------------------             
        2012        2011        2012        2011       2011          
        ---------------------------------------------------------    
              (Unaudited) (Unaudited) (Unaudited) (Unaudited)
(Audited)                  
---------------------------------------------------------             
         NIS         NIS         NIS         NIS        NIS          
          million     million     million     million     million
 
 
 
----------------------------------------------------------------------
-----
  Attributable to:
---------------------------------------------------------------------------
 
  Owners of the       Company        1,339        1,542        342   
 550        2,066
---------------------------------------------------------------------------
 
 Non-controlling      interests         6           (2)          -   
 (1)         (5)
---------------------------------------------------------------------------
 
  Profit for the        period        1,345        1,540        342  
  549        2,061
---------------------------------------------------------------------------
 
 
 
 Earnings per share        (NIS)
---------------------------------------------------------------------------
 
Basic and diluted  earnings per share  0.49         0.57        0.13 
  0.20        0.76
---------------------------------------------------------------------------
 
 
 
 
 
              "Bezeq" The Israel Telecommunication Corp., Limited
                          Consolidated Balance
Sheets
 
+-------------------------------------------------------------------------+
|                               September 30    September 30  
December 31| |                                  30 2012         30
2011         2011   | |                             
-------------------------------------------+ |                        
      (Unaudited)      (Unaudited)     (Audited)| |                  
           -------------------------------------------+ |            
                        NIS            NIS             NIS  | |Assets
                            million        million         million|
+-------------------------------------------------------------------------+
 
-----------------------------------------------------------------------
----
 Cash and cash equivalents               676          1,564     
     1,352
---------------------------------------------------------------------------
 
Investments, including  derivatives                           1,071  
       2,056             946
---------------------------------------------------------------------------
 
Trade receivables                     3,044          3,008          
3,059
---------------------------------------------------------------------------
 
Other receivables                       250            229           
 286
---------------------------------------------------------------------------
 
Inventory                               149            199           
 204
---------------------------------------------------------------------------
 
Assets classified as held  for sale                                
44             12              23
---------------------------------------------------------------------------
 
Total current assets                  5,234          7,068          
5,870
---------------------------------------------------------------------------
 
-----------------------------------------------------------------------
----
 Investments, including  derivatives                            
 94            115  
           119
---------------------------------------------------------------------------
 
Trade and other  receivables                           1,193         
1,594           1,499
---------------------------------------------------------------------------
 
Property, plant and  equipment                             6,116     
    5,959           6,022
---------------------------------------------------------------------------
 
Intangible assets                     2,175          2,237          
2,257
---------------------------------------------------------------------------
 
Deferred and other  expenses                                276      
     268             282
---------------------------------------------------------------------------
 
Investments in equity-  accounted investees  (mainly loans)          
               984          1,031           1,059
---------------------------------------------------------------------------
 
Deferred tax assets                     144            218           
 223
---------------------------------------------------------------------------
 
Total non-current assets             10,982         11,422         
11,461
---------------------------------------------------------------------------
 
-----------------------------------------------------------------------
----
 Total assets                         16,216         18,490     
    17,331
---------------------------------------------------------------------------
 
 
 
 
 
              "Bezeq" The Israel Telecommunication Corp., Limited
                    Consolidated Balance Sheets
(Continued)
 
+-------------------------------------------------------------------------+
|                               September 30    September 30  
December 31| |                                  2012            2011 
         2011    | |                             
-------------------------------------------+ |                        
      (Unaudited)      (Unaudited)     (Audited)| |                  
           -------------------------------------------+ |            
                        NIS            NIS             NIS  |
|Liabilities and equity             million        million        
million|
+-------------------------------------------------------------------------+
 
-----------------------------------------------------------------------
----
 Debentures, loans and  borrowings                             
608            776             765
---------------------------------------------------------------------------
 
Trade payables                          771            919           
 890
---------------------------------------------------------------------------
 
Other payables, including  derivatives                            
670            892             792
---------------------------------------------------------------------------
 
Current tax liabilities                 475            432           
 397
---------------------------------------------------------------------------
 
Deferred income                          60             52           
  56
---------------------------------------------------------------------------
 
Provisions                              172            220           
 186
---------------------------------------------------------------------------
 
Employee benefits                       288            467           
 389
---------------------------------------------------------------------------
 
Dividend payable                      1,978          1,974           
 971
---------------------------------------------------------------------------
 
 Total current  liabilities                           5,022         
5,732           4,446
---------------------------------------------------------------------------
 
-----------------------------------------------------------------------
----
 Debentures                            4,265          4,670     
     4,663
---------------------------------------------------------------------------
 
Loans                                 4,066          4,168          
4,150
---------------------------------------------------------------------------
 
Employee benefits                       228            271           
 229
---------------------------------------------------------------------------
 
Other liabilities                        86             44           
  93
---------------------------------------------------------------------------
 
Provisions                               71             70           
  69
---------------------------------------------------------------------------
 
Deferred tax liabilities                 54             60           
  69
---------------------------------------------------------------------------
 
Dividend payable                        473          1,386           
 924
---------------------------------------------------------------------------
 
Total non-current  liabilities                           9,243       
 10,669          10,197
---------------------------------------------------------------------------
 
-----------------------------------------------------------------------
----
 Total liabilities                    14,265         16,401     
    14,643
---------------------------------------------------------------------------
 
-----------------------------------------------------------------------
----
 Equity
---------------------------------------------------------------------------
 
Total equity attributable  to equity holders of the  Company         
                     1,951          2,048           2,650
---------------------------------------------------------------------------
 
Non-controlling interests                 -             41           
  38
---------------------------------------------------------------------------
 
Total equity                          1,951          2,089          
2,688
---------------------------------------------------------------------------
 
-----------------------------------------------------------------------
----
 Total liabilities and  equity                              
16,216         18,490          17,331
---------------------------------------------------------------------------
 
 
 
 
 
              "Bezeq" The Israel Telecommunication Corp., Limited
                     Consolidated Statements of Cash Flows
 
                     Nine months ended      Three months ended  Year
ended
 
                       September 30            September 30    
December 31                 
----------------------------------------------------------            
         2012        2011        2012        2011      2011          
       ----------------------------------------------------------    
              (Unaudited) (Unaudited) (Unaudited) (Unaudited)
(Audited)                 
----------------------------------------------------------            
          NIS         NIS         NIS         NIS        NIS         
           million     million     million     million    million
---------------------------------------------------------------------------
 
-----------------------------------------------------------------------
----
 Cash flows from  operating  activities
---------------------------------------------------------------------------
 
Profit for the  period                1,345       1,540         342  
      549      2,061
---------------------------------------------------------------------------
 
Adjustments:
---------------------------------------------------------------------------
 
Depreciation            838         802         282         275     
1,080
---------------------------------------------------------------------------
 
Amortization of  intangible assets       218         217          72 
        74        287
---------------------------------------------------------------------------
 
Amortization of  deferred and other  expenses       
          19     
    21           5           8         28
---------------------------------------------------------------------------
 
Share in losses of  equity-accounted  investees               233    
    203          92          66        216
---------------------------------------------------------------------------
 
Finance expenses,  net                     200         232         
91         113        293
---------------------------------------------------------------------------
 
Capital loss  (gain), net            (22)       (167)        (24)    
   (80)      (181)
---------------------------------------------------------------------------
 
Share-based  payments                 60         127          21      
   43        167
---------------------------------------------------------------------------
 
Income tax  expenses                597         633         178      
  243        755
---------------------------------------------------------------------------
 
Expenses (income)  in respect of  derivatives, net          5       
(20)          11        (20)       (19)
---------------------------------------------------------------------------
 
-----------------------------------------------------------------------
----
 Change in  inventory                49        (33)          56 
        71       (33)
---------------------------------------------------------------------------
 
Change in trade  and other  receivables             320       (744)  
      226       (237)      (756)
---------------------------------------------------------------------------
 
Change in trade  and other payables    (239)       (137)       (116) 
      (68)      (131)
---------------------------------------------------------------------------
 
Change in  provisions             (14)        (31)         (2)       
(33)       (64)
---------------------------------------------------------------------------
 
Change in employee  benefits              (103)         164       
(38)        (18)         82
---------------------------------------------------------------------------
 
Change in deferred  and other income        (8)           -          
6           -         50
---------------------------------------------------------------------------
 
-----------------------------------------------------------------------
----
 Net income tax  paid                  (486)       (480)      
(178)       (104)      (649)
---------------------------------------------------------------------------
 
 Net cash from  operating  activities            3,012       2,327   
   1,024         882      3,186
---------------------------------------------------------------------------
 
 
 
 
 
              "Bezeq" The Israel Telecommunication Corp., Limited
               Consolidated Statements of Cash Flows (Continued)
 
                     Nine months ended      Three months ended  Year
ended
 
                       September 30            September 30    
December 31                 
----------------------------------------------------------            
         2012        2011        2012        2011      2011          
       ----------------------------------------------------------    
              (Unaudited) (Unaudited) (Unaudited) (Unaudited)
(Audited)                 
----------------------------------------------------------            
          NIS         NIS         NIS         NIS        NIS         
           million     million     million     million     million
---------------------------------------------------------------------------
 
-----------------------------------------------------------------------
----
 Cash flow used in  investing  activities
---------------------------------------------------------------------------
 
 Investment in  intangible assets  and deferred  expenses            
 (200)       (244)        (58)        (86)      (355)
---------------------------------------------------------------------------
 
Refund from the  Ministry of  Communications for  frequencies        
      -          36           -          36        36
---------------------------------------------------------------------------
 
Proceeds from the  sale of property,  plant and  equipment           
   166         305          97          69        230
---------------------------------------------------------------------------
 
Acquisition of  financial assets  held for trading    (2,315)    
(2,857)       (460)     (2,853)    (2,859)
---------------------------------------------------------------------------
 
Proceeds from the  sale of financial  assets held for  trading       
       2,189         853          14         851      1,967
---------------------------------------------------------------------------
 
Purchase of  property, plant  and equipment       (1,009)     (1,190)
      (309)       (393)    (1,548)
---------------------------------------------------------------------------
 
Proceeds from  disposal of  investments and  long-term loans         
96           7           3           1         11
---------------------------------------------------------------------------
 
Interest and  dividends received       13          19           3    
      7         37
---------------------------------------------------------------------------
 
Other                    12         (9)           3           5      
(10)
---------------------------------------------------------------------------
 
Net cash used in  investment  activities          (1,048)     (3,080)
      (707)     (2,363)    (2,491)
---------------------------------------------------------------------------
 
 
 
 
 
              "Bezeq" The Israel Telecommunication Corp., Limited
               Consolidated Statements of Cash Flows (Continued)
 
                                                                   
Year                      Nine months ended      Three months ended   
  ended
 
                                                                 
December                        September 30            September 30  
       31                 
----------------------------------------------------------            
         2012        2011        2012        2011       2011         
        ----------------------------------------------------------   
               (Unaudited) (Unaudited) (Unaudited) (Unaudited)
(Audited)                 
----------------------------------------------------------            
          NIS         NIS         NIS         NIS        NIS         
           million     million     million     million     million
---------------------------------------------------------------------------
 
-----------------------------------------------------------------------
----
 Cash flows used in  finance activities
---------------------------------------------------------------------------
 
Issue of debentures        -       3,092          -       2,692     
3,092
---------------------------------------------------------------------------
 
Bank loans received        -       2,200          -         600     
2,200
---------------------------------------------------------------------------
 
Repayment of  debentures              (452)       (825)       (68)   
    (68)     (835)
---------------------------------------------------------------------------
 
Repayment of loans      (241)       (633)      (137)       (609)    
(648)
---------------------------------------------------------------------------
 
Net short-term  borrowing                  2         (3)        (1)  
        -        (5)
---------------------------------------------------------------------------
 
Dividends paid        (1,574)    (1,663)          -           -   
(3,155)
---------------------------------------------------------------------------
 
Interest paid           (317)      (232)       (41)        (39)     
(377)
---------------------------------------------------------------------------
 
Increase in the rate
  of  holding in a  subsidiary               (77)
         -          -           -          -
---------------------------------------------------------------------------
 
Proceeds from  exercise of options       15          16          5   
       6         21
---------------------------------------------------------------------------
 
Other                      4           -        (2)           -      
 (1)
---------------------------------------------------------------------------
 
Net cash from (used  in) finance  activities            (2,640)     
1,952      (244)       2,582        292
---------------------------------------------------------------------------
 
-----------------------------------------------------------------------
----
 Increase (decrease)  in cash and cash  equivalents            
(676)      1,199        73        1,101        987
---------------------------------------------------------------------------
 
Cash and cash  equivalents at the  beginning of the  period          
      1,352         365       603          463        365
---------------------------------------------------------------------------
 
Cash and cash  equivalents at the  end of the period        676      
1,564       676        1,564      1,352
---------------------------------------------------------------------------

  
BEZEQ - Q3 2012 Press
Release: 
http://hugin.info/151477/R/1655883/535243.pdf 
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that: 
(i) the releases contained herein are protected by copyright and    
other applicable laws; and 
(ii) they are solely responsible for the content, accuracy and     
originality of the information contained therein. 
Source: Bezeq via Thomson Reuters ONE 
[HUG#1655883] 
Investor Relations Contact:
Mr. Naftali Sternlicht
Bezeq
Phone: +972-2-539-5441
Email: ir@bezeq.co.il 
Media Relations Contact: 
Mr. Guy Hadass
Bezeq
Phone: +972-3-626-2600
Email: pr@bezeq.co.il