Bezeq Group
Investor Presentation
2023 Financial Results
Pelephone
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 representatives, include expressions of management's expectations about new and existing programs, opportunities, technology and market conditions. Although Bezeq believes its expectations are based on reasonable assumptions, these statements are subject to numerous risks and uncertainties. These statements should not be regarded as a representation that anticipated events will occur or that expected aspirations will be achieved. In addition, the realization and/or otherwise of the forward looking information will be affected by factors that cannot be assessed in advance, and which are not within the control of Bezeq, including the risk factors that are characteristic of its operations, developments in the general environment, external factors, and the regulation that affects Bezeq's operations.
This presentation contains partial information from the public reports of Bezeq under the Israeli Securities Law 5728-1968 (the "Securities Law"), which can be accessed on the Israeli Securities Authority's website, www.magna.isa.gov.il. A review of this presentation is not a substitute for a review of the detailed reports of Bezeq under the Securities Law and is not meant to replace or qualify them; rather, the presentation is prepared merely for the convenience of the reader, with the understanding that the detailed reports are being reviewed simultaneously. No representation is made as to the accuracy or completeness of the information contained herein.
The information included in this presentation is based on information included in Bezeq's public filings. However, some of the information may be presented in a different manner and/or breakdown and/or is differently edited. In any event of inconsistency between Bezeq's public filings and the information contained in this presentation, the information included in the public filings shall prevail.
The information contained in this presentation or which will be provided orally during the presentation thereof, does not constitute or form part of any invitation or offer to sell, or any solicitation of any invitation or offer to purchase or subscribe for, any securities of Bezeq or any other entity, nor shall the information or any part of it or the fact of its distribution form the basis of, or be relied on in connection with or relating to any action, contract, commitment or to the securities of Bezeq. The presentation does not constitute a recommendation or opinion or substitute for the discretion of any investor.
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Bezeq's Compass - Strategy Update
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Bezeq Group | Key Strategic Pillars (Reminder)
01Fiber as growth engine
Bezeq is leading the fiber revolution in Israel. Within the next few years, most Israeli homes will have access to Bezeq's fiber
yes as a 'triple-play' growth
02engine to accelerate fiber growth
yes markets a TV & Internet bundle while actively migrating into Full-IP
035G as revenue growth driver
Pelephone is leading the 5G revolution in Israel and within the next few years most of its subscriber base is expected to move to 5G, while increasing data usage and contributing to ARPU
Developing a leading, growth-
04focused ICT company
Bezeq International is focused on the growing areas of the ICT market: migration to the public cloud and cyber
security services, among others
Business portfolio diversification to
05create additional growth sources
The group will identify opportunities for expansion into adjacent areas which are relevant to its core capabilities and in 2024 announced its entrance into the electricity supply sector
06 Maintain balanced capital structure and return to dividend distribution
The group has returned to dividend distributions while maintaining an optimal leverage and credit rating within the AA group
4 | Creation of significant growth engines while continuing streamlining process |
Bezeq's Compass
| Transformation, Growth and Value Creation
2020-2022 | 2023 |
Focus on Growth and | |
Transformation | |
Investments | |
Mid-termValue
Creation and
Sustainability
- Launch of nationwide fiber optics plan
- 5G spectrum auction
- Launch of yes migration from satellite to IP
- Restructuring and cost-saving plan at subsidiaries
- Leverage reduction and improved debt maturity curve
- Record retail fiber net adds
- 2.1m fiber homes passed with 27% take-up rate
- 68% of yes' subscribers are on IP
- Over 1m 5G subscriber plans
- Launch of operational excellence plan (early 2024)
- Increase in dividend payout ratio to 70% (early 2024)
- 40% take-up rate; retail Internet ARPU > NIS 140
- ARPU cellular: NIS 45-50 (excl. interconnect fees)
- Completion of migration from satellite to IP, TV ARPU NIS 155-160
- Operational efficiency improvement to save OpEx and CapEx
- The Company is acting to remove the structural separation
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Bezeq's Compass | Financial Highlights
Growth in
Adj. EBITDA
Increase in Adj. EBITDA margin
Adj. EBITDA - CapEx
Significant growth in
Free Cash Flow
Financial Strength
6 | (1) For the year 2023 |
(2) ROCE- EBIT/(Total assets less current liabilities) |
2021-2023
1.4% CAGR
42%
Increase of approx. NIS 100m
12% CAGR
- 50% dividend payout policy in 2022, 60% in 2023 and 70% in 2024
- Net debt/EBITDA of 1.6 (1) with credit rating in AA group
- ROCE )2( 16.9% (1)
Mid-term
1.5%-2.0% CAGR
42%-44%
Increase of
NIS 400-500m
7%-9% CAGR
- Strive to increase dividend payout
- Maintain credit rating in AA group
Bezeq's Compass | Technological & Business Roadmap
2020
Today
Migration to fiber
Launch of fiber project
- 2.2m homes passed
- Accelerated retail fiber take-up
- 619k subscriber take-up (retail + wholesale)
- 28.6% take-up rate
- 23% increase in broadband ARPU(1)
Transition to 5G | Migration to IP | ||
5G Tender Award | Satellite to IP migration | ||
• Over 1 million subscribers | • 408k IP(2) subscribers (71%) | |
(41% of total subscribers) | ||
Mid-term | • Completion of fiber roll-out |
- 40% take-up rate (retail + wholesale)
- Retail ARPU - above NIS 140
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• Completion of IP migration | ||||
• | Approx. 80% 5G subscriber plans | |||
• | Cellular ARPU - NIS 45-50 | • | OpEx and CapEx savings | |
• | TV ARPU - NIS 155-160 | |||
Technology upgrades and business focus enhance growth potential
- As compared to Q4-2020
- IP subscribers - the number of yes subscribers viewing IP broadcasting through the yes+ and STINGTV services. This includes subscribers that use satellite services as well
Bezeq's Compass | Multi-year Operational Efficiency Project
Self service and digital
Reduce customer inquiries and length of handling them through expansion of self- service
Field technicians
Proactive, remote solutions and reduction in idle visits
Real estate and leases
Reduction in occupied area and improved agreements
Reduce representative turnover | Corporate headquarters |
Costs of turnover - recruitment, training, | Digitization and automation of |
apprenticeship and time needed to reach high | administrative procedures |
productivity |
Engineering
Methods and tools for effective project management and maintenance
Sales & services procedures
AI and data based
Energy savings
Electric cars, agreements with new suppliers, PV and storage sites evaluation
Streamlining sales processes
Prioritization, reduction of administrative time and effective management of orders
The operational efficiency project will be integrated with the completion of the fiber rollout and end of satellite to
IP migration. Together they hold potential for significant reduction in OpEx and CapEx
8 | 8 |
Bezeq Group | ESG Milestones, Ambitions and Targets
- ESG targets set
- Bezeq publishes first ESG report since 2010
- Publication of human rights policy
- Improvement in Company ESG ratings
- Approved Company policies
- CDP registration
- Join Ma'ala rating
- Bezeq subsidiaries adopt ESG targets
- Bezeq signs UN Women's Empowerment Principles to advance gender equality
- Transition to hybrid vehicles - more than 50% of fleet
- Doubled the scope of electronic waste recycling in two years to 95 tons
- Reduced electricity and water consumption as well as carbon footprint
- Committed to reducing the digital divide in Israel:
- Over 550 NGOs receive donation of Bezeq services
- Over 10,000 employee volunteer hours for the community
- Pelephone and yes adopted the Givati Brigade and will provide support in the coming years
- yes supports the Young-Docu project, which accompanies at-risk youth in the creation of documentary films
- Equal representation of women in Bezeq management and at least 40% on the BoD
- Increase rate of diverse populations to 20%
Reduce GHG
emissions to net zero
2020-2022 | 2023 | 2030 | 2050 |
Bezeq is connecting Israel to an enhanced future
Fiber deployment brings the periphery closer to the center and reduces energy use
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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 (excluding | Profit to NIS 1.33 |
Pelephone reaching over 1 | interconnect) since 2017; | billion; |
million | highest yes revenues since | |
2019 |
Increase in dividend | Upgrade in credit |
payout to 60% in March | outlook to "positive" by |
2023 and distribution of | both domestic rating |
NIS 638 million during 2023 | agencies |
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Bezeq Group is executing on its strategy while focusing on growth
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B Communications Ltd. published this content on 13 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 March 2024 12:23:10 UTC.