Bezeq Israel Telcm Un/Adr

Welcome, everyone, and thank you for joining us on BEZEC's fourth quarter and full year 2025 earnings call. I am Yochai Benitez, CEO of the BEZEC Group. Joining me today are Mr. Tom El-Raved, BEZEC Executive Chairman, Mr. Nir David, CEO of BEZEC Fixed Line, and Mr. Ilan Sigal, CEO of Peloponnese. Before we begin, please review the Safe Harbor Statement on slide 2 of our presentation, which applies to any statement made during today's call. We will start with Tomer's opening remarks, then I will review the group's financial highlights, followed by Nir on Fixline and Ilan on Peloponnese. I will then cover Bevec International. Next, we will be presenting our business strategy update. Each one of us will walk you through the key initiatives and targets for the group. Following our prepared remarks, we will open the call for Q&A. With that, let me turn the call over to Tomer for his opening remarks.

Thank you, Yochai. I am glad to see all of you joining us today. Our excellent results demonstrate the strength and resiliency of our group and the remarkable execution of our strategy. We surpassed 1 million fiber customers in Bellvec Fixed Line, and we are leading the infrastructure market with fiber deployment. Pellephone delivered its strongest year in a decade, and yes, completed an impressive financial turnaround. These achievements enabled us to launch our first-ever share buyback program, in addition to our existing dividend policy of distributing 80% of net profit, totaling to 700 million shekels. This move reflects confidence in our ability to generate strong and going free cash flow in the years ahead. Once again, we demonstrated the critical importance of having a strong and reliable telecom infrastructure for the State of Israel, especially considering the current round of facilities with Iran, ensuring continuity while maintaining high service availability for the entire public and the economy. The financial and operational targets we'll publish for 2029 reflects the growing ROI due to focus on our core activity in recent years and the group strengths of the group infrastructure and growth engines. Let's now move to slide three, where we present the group's vision Through sustained investment in advanced national infrastructures, we enable smart connectivity for every home, business, and public institution across the country. With financial strengths, AI-driven tech leadership, operational excellence, and a forward-looking global strategic perspective, we lead market transformation, strengthen Israel's competitive position in the digital era, and deliver sustainable, long-term value to our customers, employees, partners, and shareholders. This vision is what makes our group best in class resilient and innovative telco versus any global benchmark. Our nationwide infrastructure in fiber and 5G combined with our strategy in regional subsea and terrestrial connectivity makes us well positioned to support the next decade of digital and AI revolution in Israel and in the Middle East. Slide 4 highlights the past year. Core revenues grew 3%, with strong subscriber momentum. Adjusted EBITDA grew almost 8%, and adjusted net profit grew by more than 30%. For better comparison purposes, EBITDA and net profit in the 2025 financial statement have been adjusted to use a comparable metric, or COMP, that eliminates the non-recurring impact of changes in valuation. COMP EBITDA grew 1.5%, and COMP net profit decreased by 2%. Fiber subs were up 23%, and 5G subs plants were up 11%. ARPO increased across broadband, TV, and mobile. We signed a multi-year collective agreement with the fixed line union and reached principal multi-year understanding at Pelafon. On the regulatory front, the Ministry of Communication published revised wholesale targets with no material impact on Beldeck, as we advanced in the process of removal of structural separation and merging yes into Beldeck fixed line. Turning to slide 5, we see the tech and business roadmap on track to deliver our 2029 KPIs from increased fiber deployment and take-up, expansion of 5G, and growth in the TVM fiber bundle, ETS. We are building for durable growth, superior customer experience, and operating efficiency. On slide 6, we summarize our key achievements for the year, both in top line as well as profitability metrics. As mentioned, core revenue grew 3% to almost $8 billion, now representing 92% of the group revenues. Free cash flow was up 11% to $1.1 billion, while adjusted EBITDA and adjusted net profit were up year-over-year 8% and 31%, respectively. Our comp EBITDA rose 1.5% to $3.74 billion in line with our targets, and comp net profit was down 2% due to higher depreciation and hedging expenses. On slide 7, we detailed the bridge to CompEvita and CompNetProfit, which excludes the impact of changes in valuation with respect to YES and BADEC International. Moving to slide 8, we highlight our key KPIs in each of the business broadband retail ARPU continue to grow year-over-year. In addition, we recorded increases in telephone ARPU as well as in ES ARPU year-over-year due to fiber growth. I will now hand it back to Yochai who will review our financials in more detail.

Thank you, Tomer. Moving to slide 9 for the group's full year highlights. For the full year 2025, core revenues were approximately 8 billion shekels, up 3% year-over-year. Comp EBITDA increased by 1.5% to 3.74 billion shekels, while comp net profit was 1.1 billion shekels, down 2.2 due to higher depreciation and financing expenses. Free cash flow for 2025 was 1.1 billion shekels, impacted by tax assessment paid in 2025 versus the tax refund in 2024. CapEx was down 3.7% in 2025 as we begin the slowdown in fiber deployment as projected. Turning to Q4 on slide 10, Q4 results shows improvement in all financial metrics and we are posed for continued growth as projected. Core revenues grew across all key segments. Comp EBITDA was 963 million shekels and comp net profit was 311 million shekels due to lower financing expenses. Free cash flow, in the quarter benefited from lower capex and working capital timing. Moving to the next slide, we show our operating expenses. Salary expenses decreased 2.7% due to the sale of PESEC online and its deconsolidation as of the second quarter of 2025. We recorded decreases in operating expenses and depreciation expenses, mainly due to the change in yes valuation during Q2 and Q3. Other expenses were impacted by employee retirement at BASIC fixed line and higher provision for legal claims. On slides 12 and 13, we show our annual and quarterly operational metrics. We recorded growth in ARPU in all segments. Broadband retail ARPU continued to grow. We recorded increases in telephone ARPU and also in YES ARPU due to fiber growth. On slide 14, slide 14 highlights our balanced capital structure. We ended the year with net debt of 5 billion shekels and a net debt to adjusted EBITDA ratio of 1.4, maintaining AA category local credit rating with a stable outlook. Turning to shareholder remuneration on slide 15, Our board recommended a total distribution of 700 million shekels, consisting of a cash dividend of almost 550 million shekels, or almost 20 agorot per share, and for the first time, a share buyback of 150 million shekels in 2026. Looking ahead on slide 16, we share our 2026 outlook of Comp EBITDA of 3.7 to 3.8 billion shekels, Comp Net Profit of 1 to 1.1 billion shekels, and CapEx of 1.6 billion shekels. Turning to slide 17, we present our 2029 financial targets. We are targeting core revenues range of 8.7 to 8.9 billion shekels, comp EBITDA range of 4.2 to 4.4 billion shekels, and gross capex range of 1.5 to 1.6 billion shekels. That implies EBITDA minus capex roughly of 2.65 to 2.85 billion shekels and free cash flow growth above 10% CAGR through 2029. COMP's net profit is expected to grow at over 8% CAGR. We will continue to focus on maintaining our AA-level rating and strive to increase shareholder remuneration. Turning to slide 18, we highlight our 2029 operational targets. We plan to extend fiber coverage to 3.5 million homes with a take-up of 43%, lift retail broadband output to around 150 shekels, and have roughly half of fiber subscribers on speeds above 1 giga. In mobile, our target is 85% of post-paid subscribers on 5G plans with ARPU around 50 shekels and approximately 450,000 5G max subscribers. 5G sites are expected to represent 90% of the total network. For yes, we are targeting output of 250 shekels and 50% of TV customers in a TV plus fiber bundle. Operationally, the group is targeting a 40% reduction in FTEs, leading to stable salary expenses by 2029. I will now hand the call to Neil for fixed line results.