Bezeq Gains on Fourth Quarter Net, Dividend: Tel Aviv Mover

Bezeq Israeli Telecommunication Corp. (BEZQ), the country’s largest fixed-line provider, advanced the most in a week as the company reported fourth-quarter profit that beat estimates and announced a dividend payment.

Shares of the company, which also offers mobile phone services, advanced 1.8 percent, the most since March 5, to 4.776 shekels at 12:15 p.m. in Tel Aviv. The company’s 12-month dividend yield is 24 percent compared with a yield of 2.8 percent for the TA-25 index.

Profit for the quarter dropped 1 percent to 519 million shekels, according to an e-mailed statement today, higher than two estimates of 410 million shekels and 432 million shekels, according to data compiled by Bloomberg. The company reiterated its guidance for 2013 of a profit of 1.7 billion shekels to 1.8 billion shekels for the year. Bezeq said it would pay a dividend and a special dividend totaling 1.36 billion shekels in May. Free cash flow for the year rose 79 percent to 2.78 billion shekels.

“The results were good, the numbers strong and the cash flow is high,” Ori Licht, an analyst at Israel Brokerage and Investments Ltd. in Tel Aviv, said in an e-mailed note today. “The coming years are going to be more and more challenging for the company.”

The share has been the second-best performer on the benchmark TA-25 Index this year, as investors were lured by expectations of high dividends and after the company issued strong 2013 guidance on Feb. 5. Bezeq shares were the second- worst performer on the TA-25 index in 2012 after Cellcom Israel Ltd. (CEL), dropping 39 percent as competition in the telecommunications industry intensified.

Competition Impact

The company said today it posted a 7.6 percent drop in sales in the fourth quarter of 2012, to 2.45 billion shekels and a 9.6 percent drop in revenue for the year, due mainly to lower sales in the cellular segment.

Hot Telecommunication System Ltd. and Golan Telecom entered the wireless market in May leading to greater price competition. Bezeq provides mobile phone services via its Pelephone Communications Ltd. unit. Bezeq is also set to face competition additional in the fixed-line market as the Israel Electric Corp. sets up a fiber-to-the-home network and as government seeks to introduce a wholesale fixed-line market.

B Communications Ltd. (BCOM), which holds a 31 percent stake in Bezeq according to data compiled by Bloomberg, gained 3.6 percent. Internet Gold-Golden Lines Ltd. (IGLD), B Communications’ parent company, advanced 2.2 percent.

To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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