August 25, 2019 / 6:50 AM / 2 months ago

Israel's Bezeq may write down up to $599 million in second quarter

TEL AVIV (Reuters) - Bezeq Israel Telecom said on Sunday it may write down as much as 2.1 billion shekels ($599 million) in the second quarter from its mobile telephone and satellite TV units, sending its shares down nearly 7%.

Israel’s largest telecoms group said it would write down the value of mobile unit Pelephone by 951 million shekels. Last month it had provided an initial assessment for a writedown of up to 1.1 billion shekels.

In a regulatory filing in Tel Aviv, Bezeq said Pelephone’s board has approved its second-quarter results, including a 1.2 billion shekel writedown on the value of its operations. Bezeq will report second-quarter results this week.

It separately said it may have to write down an additional 1.2 billion shekels for the cancellation of a deferred tax asset at satellite TV operator Yes after Israel’s securities regulator told Bezeq that conditions for the tax benefit stemming from Bezeq’s merger with Yes were not fulfilled.

The company in May reiterated it expected to post net profit of between 900 million and 1 billion shekels for 2019.

Amid fierce competition, Pelephone’s net profit slid 78% to 2 million shekels in the first quarter, with its subscriber base falling to 2.22 million from 2.55 million at the end of 2018.

Yes has also struggled amid competition from Internet-based providers, which offer services at less than half of what Yes charges. It posted a 50 million shekel loss in the first quarter.

Bezeq’s shares have fallen 40% in 2019 and are trading at all-time lows.

Reporting by Tova Cohen and Steven Scheer; editing by Jason Neely

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