August 25, 2019 / 8:16 AM / 4 months ago

UPDATE 2-Israel's Bezeq may write down up to 2.1 bln shekels in Q2

(Adds Bezeq comments, postponement of Q2 results)

By Tova Cohen and Steven Scheer

TEL AVIV, Aug 25 (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, “resulting in a decrease in the company’s net income and shareholders’ equity.”

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 second-quarter results, including a 1.2 billion shekel reduction in Pelephone’s value.

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.

“If the said write-off is carried out, this will be an accounting write-off only without any direct impact on the company’s current cash flow forecast,” Bezeq said.

“The accounting write-off in and of itself does not impact directly on the chances of the use of the tax asset in practice,” Bezeq said.

Bezeq was set to issue second-quarter results on Monday but has postponed them until Thursday to have time to discuss the regulator’s concerns over the tax asset.

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.

$1 = 3.5078 shekels Reporting by Tova Cohen and Steven Scheer; editing by Jason Neely

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