Mobile operations hit Hot profits hard

Hot Telecommunication Systems Ltd. (TASE: HOT.B1) reported higher revenue, but lower profits, in 2012, due to the integration of its mobile carrier unit Hot Mobile Ltd. Full-year revenue rose to NIS 4.19 billion in 2012 from NIS 3.37 billion in 2011, but net profit plummeted 77% to NIS 78 million from NIS 341 million. Hot Mobile's launch cost NIS 185 million.

Hot's cable television revenue dipped 1% to NIS 2.27 billion in 2012 from NIS 2.3 billion in 2011. The decline was due to a NIS 3 drop in monthly average revenue per user (ARPU) to NIS 212 in 2012 as subscribers switched to triple play plans, which was partly offset by a net increase of 5,000 subscribers during the year to 896,000 at the end of the year.

Telephony and mobile services revenue rose from NIS 1.01 billion in 2011 to NIS 1.06 billion in 2012, including NIS 855 million from mobile services. Hot added a net 3,000 Internet subscribers during 2012 to 771,000 at the end of the year, and added a net 41,000 telephony subscribers to 676,000. Monthly ARPU for Internet subscribers fell NIS 4 to NIS 52 per month in 2012, and APRU for mobile subscribers was NIS 99 per month.

Hot CEO Herzel Ozer said, "2012 will be remembered as the year in which we broke the hegemony of the closed cellular club, and brought a real revolution to the Israeli consumer. With more than 440,00 new subscribers within seven months, Hot Mobile has positioned itself as a sound mobile carrier, which is committed to be a market leader. At the same time, the Hot group challenges the television and Internet markets, with revolutionary value offers, which has slashed the cost of family telecommunications plans, and we will continue the commitment this year. No less important, Hot is positioning itself at the forefront of telecommunications technology, with a huge NIS 1.4 billion in investments in 2012, amounting to a third of our turnover."

The report also revealed that in just two years as Hot chair Stella Hendler earned NIS 15 million. She was recently appointed Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) CEO with an annual salary of NIS 4.3 million.

Published by Globes [online], Israel business news - www.globes-online.com - on March 28, 2013