Bezeq Telecom’s executive chairman, Tomer Raved, presented its medium-term growth strategy at Citi’s 2026 Global Telecommunications, Media, and Technology Conference, emphasizing expansion in fiber broadband, subsea cable infrastructure, and operational efficiency. The company aims to achieve ILS 3 billion in revenue and EBITDA of approximately ILS 1.5 billion by 2029, with free cash flow growth exceeding 10% annually. A 14% reduction in headcount over three to four years is expected while maintaining salary costs flat, alongside declining maintenance capital spending toward ILS 500 million annually.
Fiber broadband deployment remains a cornerstone, with over 3 million homes already connected across Israel—covering 90% of the population. Current fiber take-up stands at 35%, with a target of 43% within three years. Average revenue per user (ARPU) for fiber services is ILS 142 ($50), rising to ILS 150, supported by high-speed tiers—over 90% of customers now enjoy 1 gigabit-plus speeds, while 15% access 2.5 to 5 gigabits. Higher-speed tiers contribute 15% to 20% to ARPU, with upload speeds set at 10% of download speeds. Deployment costs vary by region: ILS 150 ($50) in Israel, $1,000 in urban U.S. areas, and up to $15,000 in rural U.S. zones.
Mobile services, meanwhile, operate in a competitive Israeli market with four operators, three networks, and 20 mobile virtual network operators (MVNOs). The sector grows at over 3% annually, with EBITDA margins in the high single digits. Each ILS 1 increase in mobile ARPU adds ILS 10 million to annual EBITDA.
Infrastructure expansion also includes three subsea cable projects linking Europe, the Middle East, and Asia through Israel. Each system, costing ILS 150–200 million, delivers 300–400 terabits per second and targets 2–3x returns over three years. One project is 50% owned by Telecom Italia, a subsidiary of the Italian government.
Operational efficiency gains from AI-driven call centers—currently resolving 20% of calls end-to-end—are expected to rise to 50%–60% by 2026, adding 50–100 basis points to EBITDA margins. A pending merger with Yes, Bezeq’s broadband and TV subsidiary, could unlock an ILS 1.2 billion tax asset, boosting free cash flow by 20%–25% annually for eight years.
Bezeq’s stock (BZQIY) rose 3.77% to $13.75 on the day, within a 52-week range of $8.40–$14.10. The company’s fair value estimate from InvestingPro stands at $13.65, with an EBITDA of $1.07 billion over the past year. The dividend yield is 2.07%, raised for four consecutive years, supported by an 80% payout ratio. Net debt to EBITDA remains historically low, around 1.5x–1.6x.
Raved framed the merger as a base case, though not yet fully reflected in market valuations. The company’s financials reflect a disciplined approach to growth, balancing expansion with operational efficiency.
