Maalot said, "Due to the dynamic telecommunications' market exposure to increased competition and regulation in the recent period, we believe that Bezeq's business profile has weakened. The company's financial profile continues to be adversely affected from limited financial flexibility caused by the aggressive dividends policy and from what we believe is a modest increase in leverage in the short term." Maalot doubts that Bezeq's policy of distributing all its profits will not change any time soon.
Maalot cites, "The companies' sensitivity to changes in the character of the telecommunications market, which are liable to adversely affect their financial profile in the long term," as the reason for the downgrade. However, it adds, "The 'Stable' outlook reflects our assessment that there will be no further weakening of the companies' financial profile and business standing, and that Bezeq will continue to maintain stable high cash flows and profit margins."
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