Bezeq Drops as Citi Cuts to Neutral From Buy: Tel Aviv MoverShoshanna Solomon
Bezeq Israeli Telecommunication Corp. fell the most in a week as Citigroup Inc. cut its rating for the country’s largest telecommunication operator to neutral from buy citing the share’s price advance this year.
Shares of the company, which also offers mobile phone services, dropped 1.5 percent, the most since April 4, to 5.22 shekels at the close in Tel Aviv, trimming gains this year to 22 percent. The stock added 2.7 percent percent this week. The benchmark gauge fell 0.2 percent today, paring gains for the week to less than 0.1 percent.
Bezeq declined 39 percent in 2012 and was among the worst-performing shares in the benchmark TA-25 Index last year along with wireless carriers Cellcom Israel Ltd. and Partner Communications Co., as competition intensified. Data shows that the number of subscribers leaving the three carriers slowed to 11,000 in March from 30,000 in January and 60,000 in December, Citigroup analyst Michael Klahr wrote in an e-mailed note today.
“We see the current slowdown in competitive intensity as a temporary lull in promotions rather than a halt,” Klahr wrote in his note today. “It is too early to be talking about market repair and higher prices in the second half of 2013 and 2014.”
Hot Telecommunication System Ltd. and Golan Telecom entered the wireless market in May, leading to greater price competition for the incumbents. Bezeq is also facing increased competition in the fixed-line market as Israel Electric Corp. sets up a fiber network and as the government introduces a wholesale market.
B Communications Ltd., which holds a 31 percent stake in Bezeq according to data compiled by Bloomberg, lost 6.5 percent today. Internet Gold-Golden Lines Ltd., B Communications’ parent, retreated 7.5 percent.
Cellcom advanced 2.4 percent today to 34.36 shekels and Partner dropped 0.4 percent.