Bezeq Israeli Telecommunication Corp. (BEZQ) gained the most in more than seven months as the fixed-line and wireless services provider reported earnings that beat Bank Leumi Le-Israel Ltd.’s estimates.
Shares of Bezeq, which offers mobile-phone services through its Pelephone Communications Ltd. unit, jumped 4 percent, the most since Sept. 27, to 4.545 shekels at the market close in Tel Aviv. The stock led gains on the benchmark TA-25 (TA-25) index, which rose 1 percent.
The company’s first-quarter earnings before interest, tax, depreciation and amortization were 1.09 billion shekels ($303 million), it said in an e-mailed statement today. That beat the 1.02 billion-shekel estimate of Bank Leumi and Excellence Nessuah Brokerage Ltd.’s 1.03 billion-shekel projection, according to data compiled by Bloomberg. Profit fell 15 percent amid an increase in competition.
“The high profitability levels are a positive surprise,” Ori Licht, head of research at IBI-Israel Brokerage & Investments Ltd. in Tel Aviv, said today by phone. “The growth in broadband Internet was very strong.”
Revenue from Internet services in the quarter grew 4.7 percent to 310 million shekels. Bezeq reiterated its guidance for 2013 and said it expects to continue “streamlining processes” throughout the group.
The shares tumbled 14 percent in the past 12 months as year-on-year profit retreated in the last four quarters, including the one reported today. Hot Telecommunication System Ltd. and Golan Telecom entered the wireless market in May 2012, leading to greater price competition for the incumbents, including Bezeq.
The company is also facing more entrants in the fixed-line market as Israel Electric Corp. sets up a fiber network and as the government introduces a wholesale market. The Communications Ministry in February recommended a 70 percent fee cut on calls to fixed lines.
Sales for the quarter dropped 12 percent to 2.4 billion shekels as revenue fell in both cellular and fixed-line activities, it said. Earnings per share declined to 0.18 shekel from 0.21 shekel.
B Communications Ltd. (BCOM), which holds a 31 percent stake in Bezeq, according to data compiled by Bloomberg, surged 13 percent. Internet Gold-Golden Lines Ltd., which owns a stake in B Communications, jumped 16 percent.
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