Bezeq The Israel Telecommunication Corp. Ltd. · TASE:BEZQ
Bezeq The Israel Telecommunication — FY2023 Earnings Presentation
49 slides from Bezeq The Israel Telecommunication's earnings presentation, March 2024
Slide 1: Bezeq Group Investor Presentation 2023 Financial Results
Bezeq Group Investor Presentation 2023 Financial Results Pelephone
Slide 2: Forward-Looking Information and Statement (Disclaimer)
Forward-Looking Information and Statement (Disclaimer) This presentation contains general data and information as well as forward looking statements about Bezeq - The Israeli Telecommunications Corp., Ltd. (“Bezeq”). Such statements, along with explanations and clarifications presented by Bezeq’s re
Slide 3: Bezeq's Compass – Strategy Update
Bezeq’s Compass – Strategy Update 3
Slide 4: Key Strategic Pillars (Reminder)
Bezeq Group | Key Strategic Pillars (Reminder) 01 Fiber as growth engine Developing a leading, growth- 04 Bezeq is leading the fiber revolution in focused ICT company Israel. Within the next few years, most Bezeq International is focused on the Israeli homes will have access to Bezeq’s growing areas
Slide 5: Transformation, Growth and Value Creation
Bezeq’s Compass | Transformation, Growth and Value Creation 2023 Mid-termValue 2020-2022 Focus on Growth and Creation and Transformation Investments Sustainability • 40% take-up rate; retail Internet ARPU > NIS 140 • Launch of nationwide fiber optics plan • Record retail fiber net adds • ARPU cellul
Slide 6: Financial Highlights
Bezeq’s Compass | Financial Highlights 2021-2023 Mid-term Growth in 1.4% CAGR 1.5%-2.0% CAGR Adj. EBITDA Increase in 42% 42%-44% Adj. EBITDA margin Increase of Adj. EBITDA – CapEx Increase of approx. NIS 100m NIS 400-500m Significant growth in 12% CAGR 7%-9% CAGR Free Cash Flow • 50% dividend payout
Slide 7: Technological & Business Roadmap
Bezeq’s Compass | Technological & Business Roadmap Migration to fiber Transition to 5G Migration to IP 2020 Launch of fiber project 5G Tender Award Satellite to IP migration • 2.2m homes passed • Over 1 million subscribers • 408k IP(2) subscribers (71%) (41% of total subscribers) • Accelerated retai
Slide 8: Multi-year Operational Efficiency Project
Bezeq’s Compass | Multi-year Operational Efficiency Project Self service and digital Field technicians Real estate and leases Reduce customer inquiries and length of Proactive, remote solutions and reduction in idle visits Reduction in occupied area and improved handling them through expansion of se
Slide 9: ESG Milestones, Ambitions and Targets
Bezeq Group | ESG Milestones, Ambitions and Targets • ESG targets set • Bezeq subsidiaries adopt ESG targets • Equal representation of women in Bezeq • Bezeq signs UN Women's Empowerment Principles to advance management and at least • Bezeq publishes first ESG report since gender equality 40% on the
Slide 10: 2023 Summary
Bezeq Group | 2023 Summary Strong execution in strategic Highest Bezeq Fixed-Line Adj. EBITDA rose 2.2% growth drivers – robust fiber revenues in the last to NIS 3.8 billion; take-up, consistent growth decade; highest Pelephone 11% increase in Adj. Net in 5G subscriber plans in service revenues (exc
Slide 11: 2023 Summary
Bezeq Group | 2023 Summary Revenues Adj. EBITDA (1) Adj. Net Profit (1) NIS 9.1 billion NIS 3.8 billion NIS 1.3 billion Adjusted EBITDA margin of 42.0% 1.3% 2.2% 11.0% Free Cash Flow Decrease in Net Debt NIS 1.3 billion NIS 427 million 7.7% 7.6% All results are compared to 2022 or Q4-2022 unless oth
Slide 12: 2023 Summary (Cont'd)
Bezeq Group | 2023 Summary (Cont’d) Fiber Net Adds Retail Internet ARPU Cellular subscribers Cellular ARPU Revenues 300k 123 2.62 (Excl. interconnect fees) (retail and wholesale) NIS million NIS 44 NIS 1.31 billion 7.9% 1.5% 2.3% 2.5% TV subscribers 574k 5G subscriber plans Fiber Subscribers Homes P
Slide 13: 2023 Key Financial Highlights
Bezeq Group | 2023 Key Financial Highlights | NIS million Revenues Adj. EBITDA (1) Adj. Net Profit (1) 1.3% 2.2% 11.0% 8,821 8,986 9,103 3,709 3,736 3,817 1,328 1,154 1,196 42% 42% 42% 2021 2022 2023 2021 2022 2023 2021 2022 2023 % - Adjusted EBITDA margin • Revenue growth driven by 2.5% increase in
Slide 14: Q4-2023 Key Financial Highlights
Bezeq Group | Q4-2023 Key Financial Highlights | NIS million Revenues Adj. EBITDA (1) Adj. Net Profit (1) 0.6% 1.4% 18.4% 2,244 2,308 2,299 2,265 2,231 907 936 987 974 920 321 354 357 250 296 42% 40% 42% 41% 43% 43% 40% 43% 41% 43% 42% 43% 40% 41% 41% Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 Q4-2022
Slide 15: Annual Key Operational Metrics
Bezeq Group | Annual Key Operational Metrics Subscribers (end of period, in thousands) ARPU (NIS) 188 183 182 2,576 2,580 2,618 123 114 106 1,583 1,503 1,442 1,023 1,032 1,028 47 43 44 563 579 574 40 42 37 501 472 467 2021 2022 2023 2021 2022 2023 Stabilizing wholesale Internet subscribers 16% growt
Slide 16: Quarterly Key Operational Metrics
Bezeq Group | Quarterly Key Operational Metrics Subscribers (end of period, in thousands) ARPU (NIS) 2,618 181 185 185 182 2,580 2,585 2,593 2,618 175 120 122 124 125 117 1,503 1,488 1,473 1,454 1,442 1,032 1,031 1,028 1,029 1,028 44 43 45 47 42 579 580 579 576 574 40 41 39 472 474 477 471 467 34 33
Slide 17: Financial Debt
Bezeq Group | Financial Debt Decrease in net debt Financial Debt (NIS billion) • Decrease of NIS 3.7 billion, or 41% since 2018 2.5 2.4 3.0 16.0 2.1 • Decrease of NIS 430 million, or 8% y-o-y 1.8 2.5 11.2 1.7 14.0 1.6 9.6 2.0 Further improvement in Net debt/Adjusted EBITDA(1) ratio 12.0 2.3 8.4 8.1
Slide 18: Dividend Policy Update
Bezeq Group | Dividend Policy Update • The Company's Board of Directors decided to update its dividend distribution policy, according to which the Company will distribute to its shareholders on a semi-annual basis, a cash dividend of 70% of the semi-annual profit (after tax) according to the Company
Slide 19: 2024 Guidance
Bezeq Group | 2024 Guidance 2023 Outlook(2) Results 2023 2024 Outlook)3( Adj. EBITDA (1) NIS 3.8 billion NIS 3.82 billion NIS 3.8 billion Adj. net profit (1) NIS 1.32 billion NIS 1.33 billion NIS 1.2 billion CapEx NIS 1.75 billion NIS 1.71 billion NIS 1.8-1.9 Billion (4) Fiber deployment 2 million h
Slide 20: Mid-Term Ambitions Update
Bezeq Group | Mid-Term Ambitions Update Mid-term Ambitions Mar 2023 Mid-term Ambitions CAGR 1% 1.5%-2.0% Adj. EBITDA 42%-44% Adjusted EBITDA Margin 41%-43% Stable CapEx and CapEx/Sales until 2025; u CapEx (gross) gradual reduction thereafter 16%-18% CapEx/Sales E ,p Adj. EBITDA less CapEx Increase o
Slide 21: Bezeq Fixed-Line 2023 Summary
Bezeq Fixed-Line | 2023 Summary Revenues grew 2.5% to NIS Adj. Net Profit grew 8.3% to 7.9% growth in retail 4.4 billion – highest in the last NIS 1.02 billion - highest Internet ARPU, reaching decade. Growth in all NIS 123 since 2020. activities except for telephony revenues which Free cash flow in
Slide 22: Fixed-Line 2023 Key Financial Highlights
Bezeq Fixed-Line | 2023 Key Financial Highlights | NIS million Revenues Adj. EBITDA (1) Adj. Net Profit(1) 2.5% 1.5% 8.3% 4,182 4,306 4,412 2,596 2,580 2,618 997 938 1,016 62% 60% 59% 2021 2022 2023 2021 2022 2023 2021 2022 2023 % - Adjusted EBITDA margin CapEx Free Cash Flow • Revenue growth record
Slide 23: Fixed-Line Q4-2023 Key Financial Highlights
Bezeq Fixed-Line | Q4-2023 Key Financial Highlights | NIS million Revenues Adj. EBITDA(1) Adj. Net Profit(1) 2.8% 3.1% 20.9% 1,057 1,111 1,130 1,084 1,087 618 654 681 646 637 267 254 252 243 201 59% 59% 60% 60% 59% Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 Q4-20
Slide 24: Fixed-Line 2023 Broadband Internet
Bezeq Fixed-Line | 2023 Broadband Internet Broadband Revenues (NIS million) Retail Broadband Lines (thousands) 8.8% 0.4% 1,947 1,023 1,032 1,028 1,624 1,789 65 198 100 0 367 900 800 700 42% 44% 43%40% 43% 42%42% 42% • Significant increase in fiber 500 600 958 834 300 661 customer take up 400 100 200
Slide 25: Fixed-Line Q4-2023 Broadband Internet
Bezeq Fixed-Line | Q4-2023 Broadband Internet Broadband Revenues (NIS million) Retail Broadband Lines (thousands) 7.4% 0.4% 1,032 1,031 1,028 1,029 1,028 479 485 489 494 100 0 246 460 198 289 335 367 900 800 700 42% 44% 43%40% 43% 42%42% 42% • Significant increase in fiber 500 600 834 785 739 300 69
Slide 26: Accelerated Fiber Take-Up – Retail and Wholesale
Bezeq Fixed-Line | Accelerated Fiber Take-Up – Retail and Wholesale Retail Fiber – Net Adds Wholesale Fiber – Net Adds (Thousands) (Thousands) IRU 48 46 Acceleration 41 43 Agreement 36 36 Plan 39 with Partner 30 27 32 25 42% 11 42% 13 14 44% 43%40% 43% 42%42% Q2-2022 Q3-2022 Q4-2022 Q1-2023 Q2-2023
Slide 27: Continued Fiber Deployment with Increased Take-up Focus
Bezeq Fixed-Line | Continued Fiber Deployment with Increased Take-up Focus Homes Passed (thousands) Total Fiber Net Adds (thousands) (Retail and Wholesale) 1,970 2,070 2,161 84 1,835 82 1,526 1,689 73 55 59 42% 44% 43%40% 43% 42% 42% Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 As of Q4-2022 Q1-2023 Q2-2
Slide 28: Data, Telephony, Cloud & Digital Revenues
Bezeq Fixed-Line | Data, Telephony, Cloud & Digital Revenues | NIS million Transmission & Data Cloud & Digital 2.7% 5.4% 1,087 1,132 1,163 • Continued growth in data revenues 331 349 offset by a decrease in traffic 318 revenues from ISP companies • Telephony revenues were impacted by MOC tariff redu
Slide 29: Data, Telephony, Cloud & Digital Revenues
Bezeq Fixed-Line | Data, Telephony, Cloud & Digital Revenues | NIS million Transmission & Data Cloud & Digital • Continued growth in data 8.0% 2.4% revenues offset by a decrease in traffic revenues from ISP 276 286 289 290 298 companies 89 • Telephony revenues were 87 87 86 impacted by the second tr
Slide 30: Fixed-Line Operating Expenses
Bezeq Fixed-Line | Operating Expenses | NIS million Salaries Operating Expenses 6.0% 1.3% 759 769 • Increase in salaries mainly due to 667 salary updates, employee 934 970 1,028 recruitment relating to the fiber project and the public sector wage agreement which impacts tenured employees 2021 2022 2
Slide 31: Fixed-Line Operating Expenses
Bezeq Fixed-Line | Operating Expenses | NIS million Salaries Operating Expenses 10.5% 7.4% • Increase in salaries mainly due 203 to salary updates as well as 263 253 250 262 195 197 189 188 employee recruitment relating 237 to the fiber project 42% 44% 43%40% 43% 42%42% 42% • Decrease in operating e
Slide 32: Bezeq's Entrance into Electricity Sector
Bezeq’s Entrance into Electricity Sector Electricity market reform • Jan 2024 - A revolution in the Israeli electricity market with the opening of the supply sector for residential customers and small businesses to competition • Competitive market in 2030 - NIS 10 billion(1): • 1.3 million residenti
Slide 33: Bezeq's Entrance into Electricity Sector (Cont'd)
Bezeq’s Entrance into Electricity Sector (Cont’d) Joint Venture License Bezeq rationale ✓ Electricity supply – adjacent and complementary Customer targets growth activity ✓ Increase in customer stickiness Customer discount policy ✓ No economic correlation with Bezeq’s core Electricity trade activiti
Slide 34: Fixed-Line Key Takeaways
Bezeq Fixed-Line | Key Takeaways Growth in all key financial Accelerated retail fiber take- 8.8% growth year-over- metrics in 2023 up, combined with year in Internet revenues continued increase in ARPU offset the MOC decrease in telephony tariffs Entrance into Strong and growing Growth in business s
Slide 35: Pelephone 2023 Summary
Pelephone | 2023 Summary Highest revenues from services (excl. ARPU (excl. interconnect fees) interconnect fees) since 2017 with 1.5% increased NIS 1 to NIS 44 growth reaching NIS 1.39 billion, driven by an increase in ARPU, increase in 5G subscriber plans as well as an increase in postpaid subscrib
Slide 36: Positive Trends in Service Revenues and 5G Subscriber Plans
Pelephone | Positive Trends in Service Revenues (excl. interconnect fees) and 5G Subscriber Plans Revenues from Services (excl. interconnect fees) Subscribers on 5G Plans NIS Millions (In thousands) 31.9% 1,034 1,075 961 1,410 1,366 1,365 1,386 898 1,314 784 834 1,133 1,204 2017 2018 2019 2020 2021
Slide 37: Pelephone 2023 Key Financial Highlights
Pelephone | 2023 Key Financial Highlights | NIS Million Revenues (excl. interconnect fees) Adj. EBITDA (1) Adj. Net Profit (1) 0.3% 1.4% 15.0% 193 1,856 1,972 1,977 761 750 164 633 647 608 592 32% 32% 76 1 28% 32% 32% 1,209 1,364 1,385 2021 2022 2023 2021 2022 2023 2021 2022 2023 Services (excluding
Slide 38: Pelephone Q4-2023 Key Financial Highlights
Pelephone | Q4-2023 Key Financial Highlights | NIS Million Revenues Adj. EBITDA (1) Adj. Net Profit (1) (excl. interconnect fees) 1.4% 3.3% 26.3% 490 505 506 483 203 49 483 184 182 187 178 43 44 135 38 151 171 133 153 28 339 334 350 371 330 31% 30% 32% 35% 32% Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023
Slide 39: Pelephone Q4-2023 Key Operational Metrics
Pelephone | Q4-2023 Key Operational Metrics Subscribers (Thousands) ARPU (NIS) 1.5% 4.5%(1) 57 57 58 57 2,580 2,585 2,593 2,618 2,618 52 13 14 13 10 431 426 427 431 416 10 2,149 2,159 2,166 2,187 2,202 44 43 45 47 42 Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 Pos
Slide 40: yes 2023 Summary
yes | 2023 Summary Highest revenues since 2019, with yes is the largest Israeli IP operator growth of 2.5% to NIS 1.31 billion, with 408k customers watching TV driven by the launch of TV + Bezeq through IP broadcasting (71% of fiber bundle, together with total subscribers) (1), an increase of agreem
Slide 41: yes Revenue Growth Turnaround
yes | Revenue Growth Turnaround | NIS Million 200 Erosion Growth 1700 1,473 150 1500 1,345 1,309 1,287 1,270 1,277 100 1300 32 50 1100 7 0 900 (17) -50 700 (58) -100 500 300 (128) -150 100 (177) -200 2018 2019 2020 2021 2022 2023 Year-over-year change in revenues Revenues 41
Slide 42: yes 2023 Key Financial Highlights
yes | 2023 Key Financial Highlights | NIS Million Revenues Adj. EBITDA (1) Adj. Net Profit (Loss) (1) 2.5% 3.5% 1,270 1,277 1,309 266 239 231 3 21% 18% 18% (28) (38) 2021 2022 2023 2021 2022 2023 2021 2022 2023 % - Adjusted EBITDA margin • Revenue growth driven by the launch of CapEx Free Cash Flow
Slide 43: yes Q4-2023 Key Financial Highlights
yes | Q4-2023 Key Financial Highlights | NIS Million Revenues Adj. EBITDA (1) Adj. Net Profit (Loss) (1) 4.2% 11.5% 66.7% 17 330 329 336 328 316 72 - 1 61 55 58 54 19% 17% 21% 18% 17% (9) (15) Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 Q4-2022 Q1-2023 Q2-2023 Q3-
Slide 44: yes Q4-2023 Key Operational Metrics
yes | Q4-2023 Key Operational Metrics Subscribers (Thousands) ARPU (NIS) 0.9% 3.3% 579 580 579 576 574 181 185 185 182 175 • Continued growth in IP subscribers to 71% of yes subscribers (2) • Continued growth in Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2024 Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 fiber su
Slide 45: Bezeq International 2023 Summary
Bezeq International | 2023 Summary Increase in ICT activity offset Focus on growth in ICT most of the decrease in market with emphasis on consumer ISP revenues cyber, integration, public cloud and data centers Cost savings due to 11.9% growth in Adjusted Adjusted Net Profit grew reduction in EBITDA
Slide 46: Bezeq International 2023 Key Financial Highlights
Bezeq International | 2023 Key Financial Highlights | NIS Million Revenues Adj. EBITDA (1) Adj. Net Profit (1) 2.2% 11.9% 24.4% 1,237 1,239 1,212 203 198 51 177 41 16% 14% 16% 16 15% 17% 2021 2022 2023 2021 2022 2023 2021 2022 2023 % - Adjusted EBITDA margin • Increase in revenues from business serv
Slide 47: Bezeq International Q4-2023 Key Financial Highlights
Bezeq International | Q4-2023 Key Financial Highlights | NIS Million Revenues Adj. EBITDA (1) Adj. Net Profit (1) 4.7% 11.6% 75.9% 319 312 293 303 304 20 18 43 51 49 50 48 13 10 16% 17% 17% 16% 13% - Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 Q4-2022 Q1-2023 Q2-2
Slide 48: Bezeq Group 2023 Summary
Bezeq Group | 2023 Summary Strong execution in strategic Highest Bezeq Fixed-Line Adj. EBITDA rose 2.2% growth drivers – robust fiber revenues in the last to NIS 3.8 billion; 11% take-up, consistent growth decade; highest Pelephone increase in Adj. Net in 5G subscriber plans in service revenues (exc
Slide 49: Thank You!
Thank You! For more information please visit us ir.bezeq.co.il
Bezeq The Israel Telecommunication — FY2023 Earnings Presentation on 6ix