HOT Telecommunication Systems Ltd. (TASE: HOT) published its second quarter financials for 2016 this morning, showing improvement in the main measures. The telecommunications group reports a net profit of NIS 18 million, which compares with a loss of NIS 26 million in the first quarter and a loss of NIS 13 million in the corresponding quarter of 2015. Hot's operating profit rose 23% in comparison with the corresponding quarter to NIS 107 million. Revenue grew by 2% in comparison with the corresponding quarter to over NIS 1 billion.
The results of Hot's mobile carrier Hot Mobile continue to be weak. Although its subscriber base rose to more than 1.335 million and its churn rate fell to 37%, it posted an operating loss of NIS 86 million. Despite the operating losses, Hot Mobile continues the momentum of subscriber recruitment, adding 45,000 in the second quarter. Hot Mobile's revenue grew by 11% in comparison with the corresponding quarter, to NIS 251 million.
Hot the parent company, which prides itself on having improved its service, reports a drop in cable television subscriber numbers. In the second quarter, the number of subscribers fell 2% to 1.023 million from 1.045 million in the corresponding quarter. Hot has been affected by the introduction of Cellcom Israel Ltd.'s (NYSE:CEL; TASE:CEL) television service.
EBITDA (earnings before interest, taxes, depreciation and amortization) on Hot's cable television business fell 4% in comparison with the corresponding quarter to NIS 408 million. The churn rate did however fall to 13%, in comparison with 18% in the corresponding quarter. Hot's revenue from cable television fell 1.8% to NIS 769 million and its operating profit on this business fell 14% to NIS 193 million in comparison with the corresponding quarter.
Hot CEO Tal Granot-Goldstein said, "The group's switch to profit and the 80% fall in the churn rate are the result of a revolution that Hot has undergone in all respects. In the past year, the company has made fundamental improvements in two areas - customer service and customer attrition - while we continue to invest in infrastructure, technology and content for our customers' benefit."
Published by Globes [online], Israel business news - www.globes-online.com - on August 9, 2016
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