August 29, 2019 / 6:32 AM / 3 months ago

UPDATE 1-Israel's Bezeq sees big 2019 loss after second quarter writedowns

(Adds details, chairman comments)

JERUSALEM, Aug 29 (Reuters) - Bezeq Israel Telecom swung to a loss in the second quarter and forecast a big loss for 2019 after two major writedowns in its business units.

Bezeq, as expected, reported on Thursday a tax-related writedown of 1.17 billion shekels in its satellite TV unit YES and an additional 951 million shekels from the decline in value of its cellphone operator Pelephone.

The company revised its 2019 forecast to a net loss of 1.1 billion shekels versus a previous forecast of a profit of 900 million to 1 billion shekels.

Israel’s largest telecoms group said it lost 1.57 billion shekels ($448 million) in the quarter, compared with a profit of 195 million shekels a year earlier.

Revenue dropped 4.7% to 2.22 billion shekels.

“The quarterly results were significantly impacted by the write-off of the tax asset in respect of losses from YES. It should be noted that this is an accounting write-off and does not affect the company’s current operations,” Chairman Shlomo Rodav said in a statement.

He said “fierce competition” in the cellular market led to Pelephone’s drop in value.

New competition in all areas of Israel’s telecoms market has forced Bezeq to cut costs, which Rodav said resulted in short-term expenses that will “create significant value in the medium and long term.”

The company’s main fixed line business showed a 178% gain in profit, boosted by a capital gain of 403 million shekels.

Mobile unit Pelephone saw net profit slide 71% to 2 million shekels amid fierce competition, with its subscriber base falling to 2.26 million from 2.6 million a year earlier.

$1 = 3.5078 shekels Reporting by Ari Rabinovitch; Editing by Tova Cohen and Deepa Babington

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