August 7, 2014 / 7:17 AM / 3 years ago

Bezeq Israel Telecom Q2 profit jumps on capital gain

JERUSALEM, Aug 7 (Reuters) - Bezeq Israel Telecom reported a higher-than-expected rise in quarterly profit, boosted by a large capital gain that offset further declines for its mobile and fixed-line services.

Bezeq, Israel’s largest telecoms group, said on Thursday it earned 810 million shekels ($236 million) in the second quarter, up from 473 million a year earlier.

The results included a net gain of 568 million shekels, mainly from the sale of its Yad2 classified ads website to Axel Springer Digital Classifieds, 70 percent owned by German media company Axel Springer.

Bezeq’s revenue slipped 4.3 percent to 2.25 billion shekels. It was forecast to have earned 801 million shekels from revenue of 2.27 billion, according to a Reuters poll of analysts.

Bezeq’s mobile unit Pelephone recorded a 34 percent drop in profit while its fixed-line division, which offers phone and Internet services, posted a 10.5 percent profit decline.

Pelephone and its two main competitors are grappling with a price war following a shake-up of Israel’s mobile phone industry in 2012 that ushered in six new operators.

Competition has also been fierce for Internet services. The number of subscribers at Pelephone fell 3.4 percent over the prior year to 2.61 million.

David Mizrahi, Bezeq’s chief financial officer, said the profit from the Yad2 sale would allow a dividend distribution representing a semi-annual yield of 7.3 percent.

Bezeq will pay a dividend of 1.267 billion shekels, or 0.46 shekel a share, for the first half of 2014.

Bezeq maintained an annual forecast of 2014 net profit of 2 billion shekels and earnings before interest, tax, depreciation and amortisation (EBITDA) of 4.5 billion shekels.

Pelephone’s two main rivals Cellcom and Partner Communications publish their results later in August.

$1 = 3.4357 Israeli Shekels Reporting by Steven Scheer; editing by David Clarke

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