Bezeq Gains as 2013 Guidance Beats Estimates: Tel Aviv Mover
Bezeq Israeli Telecommunication Corp. (BEZQ) advanced the most in almost a week as the country’s largest telecommunications provider by sales released full-year 2013 earnings forecast that exceeded analyst estimates.
Shares in Tel Aviv gained as much as 4 percent and were trading 3 percent higher at 4.388 shekels at 3:13 p.m. in Tel Aviv. The TA-25 benchmark index advanced 0.5 percent.
Bezeq said today 2013 profit would come in between 1.7 billion ($460 million) and 1.8 billion shekels, higher than the 1.54 billion shekels forecast by a mean estimate of three analysts compiled by Bloomberg. The company also said that “streamlining processes are expected to continue throughout the group” and that it will increase the pace installing optical lines this year. Bezeq reiterated its guidance for 2012 today.
“The guidance was ahead of street estimates which means that the erosion in profits that analysts have been expecting are going to happen at a slower pace,” Zach Herzog, head of International sales at Psagot Investment House Ltd. in Tel Aviv, said today by phone. “This will allow the company time to cut costs to offset losses from lower market share as competition increases.”
Bezeq’s shares have been the third-worst performer in the TA-25 benchmark index in the past 12 months, dropping 29 percent, after Cellcom Israel Ltd. (CEL) and Partner Communications Co., (PTNR) the country’s largest mobile-phone providers. Hot Telecommunication System Ltd. and Golan Telecom entered the wireless market in May leading to greater price competition and smaller market shares for the incumbents. Bezeq provides mobile phone services via its Pelephone Communications Ltd. unit.
Bezeq is also set to face competition 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. On Jan. 27, Israel Electric Corp. won the finance ministry’s approval to build a nationwide fiber-optic network to compete with incumbent providers Bezeq and Hot Telecommunication System Ltd. In November, Bezeq’s board approved an agreement that will allow Partner to buy access to Bezeq’s fixed-line network as part of the wholesale fixed-line market.
Free cash flow in 2013 is expected to be greater than 2.7 billion shekels, the company said. Earnings before interest, depreciation and amortization is expected to be in the range of 4.25 billion shekels to 4.35 billion shekels, the company said in an e-mailed statement today. The mean estimate of six analysts compiled by Bloomberg was for EBITDA to come in at 3.97 million shekels.
Bezeq Chief Executive Officer Avraham Gabbay, at the company’s helm since November 2007, will leave on July 17, Bezeq said last month.
B Communications Ltd. (BCOM), which has a 30.97 percent stake in Bezeq, gained 15 percent in 1.7 times the three-month average daily volume. Internet Gold-Golden Lines Ltd. (IGLD), which has a stake in B Communications, advanced 13 percent in 4.2 times the three- month average daily volume.
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