UPDATE 1-Israel's Bezeq Telecom Q1 profit up, little impact from coronavirus

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JERUSALEM, May 21 (Reuters) - Bezeq Israel Telecom reported a higher quarterly profit amid a drop in financing expenses and said the coronavirus outbreak has so far had a minimal impact on its results.

Bezeq, Israel’s largest telecoms group, said on Thursday it earned 332 million shekels ($94.5 million) in the first three months of 2020, compared with 300 million a year earlier.

Revenue slipped 3.1% to 2.19 billion shekels, while financing expenses slid 65.7% to 34 million shekels.

Bezeq said it was unable to publish an accurate outlook for 2020 and would “consider, depending on the situation, the appropriate date for publishing guidance for the group results.”

It added that while the crisis had harmed its mobile unit Pelephone, “the total impact of the COVID-19 pandemic on the financial condition of the group companies was immaterial in the first quarter of 2020” since Bezeq is considered an essential service.

Pelephone’s revenue slipped 0.9% in the quarter, while it moved to a small net loss even as its subscriber base grew to 2.367 million. It estimated a decline of 150 million shekels in revenue and 100 million in operating profit in 2020.

Chief Executive David Mizrahi said that in the firm’s main fixed-line business, traffic during the pandemic -- when many people are working and studying at home -- has jumped as it has expanded in sectors such as ultra-Orthodox Jews, who traditionally have shunned internet use.

The company said it was working to mitigate the impact of the virus through cost cutting steps.

Bezeq “estimates that its financial strength ... will enable it to adequately deal with the effects of the pandemic, including its continuation or worsening beyond the group’s assumptions, as they may occur,” it said.

Searchlight Capital Partners in late 2019 bought a controlling share in Bezeq, which in addition to Pelephone, also owns satellite TV firm YES and internet service provider Bezeq International.

$1 = 3.5126 shekels Reporting by Steven Scheer; Editing by Tova Cohen and David Evans