Q4 2024 Bezeq The Israel Telecommunication Corp Ltd Earnings Call
Welcome everyone and thank you for joining us on <unk> 2020 for fourth quarter and full year earnings call. It.
<unk> CFO of the basic rule.
Speaker Change: Joining us on the senior management team today, we have Mr. Robert <unk> Chairman he's done neither David <unk> fixed line CEO and Mr. Ilan Seagull your telephone on yes, what.
Speaker Change: Well, we started the call I would like to direct your attention to the Safe Harbor statement on slide two of our 2024 Investor presentation, which also applies to any statement made during today's call we.
Speaker Change: We would like to inform you that this event is being recorded.
Speaker Change: Following the presentation of our results, we will have a Q&A session.
Speaker Change: With that said, let me now turn the call over to Turner for his opening remarks. After Haynes redaction I will continue the presentation of our group's financial highlights followed by <unk>, who will discuss bezeq fixed line results and Ilan, who will cover the results from telephone and yes, I will conclude the presentation with better international results.
Speaker Change: Gentlemen.
Speaker Change: Welcome everyone.
Speaker Change: Here's a recap of 2024.
Speaker Change: <unk> in Israel.
Speaker Change: The strong year for bad debt.
Speaker Change: Great to see familiar faces and many people who have recently met in person in New York, London, and obviously in Europe and in the U S.
Speaker Change: We start on slide four.
Speaker Change: We are continuing to successfully implement our growth strategy, which we presented to the market over three years ago.
Speaker Change: Fiber has been a key pillar in our strategy and Bezeq is successfully meeting fiber revolution in Israel we.
Speaker Change: We are near completion this year of our fiber projects with over 90% of our projects already completed.
Speaker Change: Already have 2% take up on the network and expect this to grow to at least 40% in the near term with continued ARPA growth, yes, accelerating fiber growth with 10% of the group's fiber stops today and supporting our group market share in retail broadband.
Speaker Change: This is this will be further illustrated.
Speaker Change: Sure separation between Bezeq and Es is.
Speaker Change: Is it more.
Speaker Change: <unk> is leading the five year evolution in Israel and benefiting from the positive contribution to ARPA.
Speaker Change: International still any transformation process, focusing on the ICT and cloud service markets with access for our new collective Labor agreement signed in Q4 in.
Speaker Change: In 2024, we entered the electricity supply sector to create additional sources of growth and the management teams here are actively working at complementary services and partnerships in other verticals. We continue to maintain a very strong balance sheet.
Speaker Change: And alongside grading our ratings to dominate this year. We also increased our dividend policy this quarter to 80% payout, reflecting more than 5%.
Speaker Change: Let's move to the next slide slide number five.
Speaker Change: This slide really reiterates the successful evolution of our strategy on our path to reaching our midterm target kpis, including the completion of the fiber deployment. This year the migration from satellite TV.
Speaker Change: In 2026, and the transition to <unk> on slide six we actually see the excellent visibility to achieving our mid term targets and we are now increasing some of our midterm targets.
Speaker Change: <unk>, 2% annual growth in adjusted EBITDA, and an increase of at least $500 million check and adjusted EBITA minus.
We also added a new financial targets this quarter up 2% to 3% CAGR in core revenues.
Speaker Change: On slide seven.
Speaker Change: We see the recap of 2024, where we delivered growth of one 3% of coal revenue.
Speaker Change: The growth in telephone and fixed line adjusted EBITDA was down slightly.
Speaker Change: Due to the decrease in collateral revenues, resulting from the MLC decreasing tariffs and the impact of the war on roaming revenues Q4 is excellent with adjusted EBITDA growth of almost 6% and adjusted net income growing at 23% year over year.
Speaker Change: Positively impacted by Bristol funds.
Speaker Change: And the roaming rebound we continue to grow our strategic drivers recording 43% increase in fiber takeoff and 20% growth in fact, your subscriber counts we are experiencing a very rationale regulatory environment with an emphasis on the hottest submarkets and active ongoing efforts to it.
Speaker Change: All of the structural separation.
Speaker Change: Turning to slide eight.
Speaker Change: You can see the key highlights of 2024 and after adjusting for the impact of the war on roaming revenues core revenues were actually up one 7% this year and adjusted EBITDA and adjusted net profit was down almost 2% 3% respectively.
Speaker Change: Turn to slide number nine where you can really see how even ending the year with volatile geopolitical situation or called <unk>.
Speaker Change: Continues to perform and outperform total fiber subscribers as of today reached 850000, which 264 million home passed.
Speaker Change: And Bob Mcmahon and $5 subsidy plan of which $1 3 million yes.
Toby: Yet our pool of subscribers, which includes the TV and fiber activity reached 185, <unk> before I turn the call over to Toby.
Talk about our financial results I'd like to thank you on behalf of here Elon myself and the rest of management for your.
Speaker Change: Professionalism commitment and partnership and dedication over the past four years, you've been great partner and on this occasion I would also like to welcome you hi beneath our new group CFO has been with the group as a CFO of <unk> for the past three years and in order to grow up extremely well.
Toby: It takes some here.
Speaker Change: Thank you very much on that.
Speaker Change: It's been great to work with you the rest of the management team as well as we'd like.
Speaker Change: Wonderful Finance Division team is basic I'm proud of the work that we've done together in laying a solid strategic and financial foundation for the long term.
All we have accomplished together.
Speaker Change: This will be my last call with the company as I turn to my new role as CFO The Strauss group.
Speaker Change: I look forward to watching <unk> continued success.
Speaker Change: Moving to slide 10, we show a one 3% increase in coal revenues due to growth in Pentagon on Bezeq fixed line.
Speaker Change: <unk> EBITDA and adjusted net profit were.
Speaker Change: Impacted by lower telephony revenues.
Speaker Change: Due to the many just communications <unk>.
Speaker Change: <unk> on the impact of the war on roaming revenues.
Speaker Change: The next slide we show fourth quarter results core revenues grew two 5% year over year and profitability metrics were positively impacted by improved decent whose.
Telephone and the reversal of the provision for the universe on fiber.
Speaker Change: Turning to the next slide we show our annual operational metrics I would like to highlight the 6% increase in our retail both on Oracle.
Speaker Change: Along with a continued increase in Standalone <unk> subscribers.
Speaker Change: Slide 13 shows our quarterly operational metrics broadband retail ARPA continue to grow with stable, yes article from subscribers.
Speaker Change: Fiber growth.
Next slide highlights a further decrease of 250 million chickens, or 5% and our net debt to approximately $4 9 billion shekels.
Speaker Change: While improving the coverage ratio from two five in 2018 to one five times in 2024. This is the lowest coverage ratio since 2010.
Speaker Change: We remain committed to maintaining our high credit rating.
Speaker Change: Turning to the next slide I've mentioned, the board of directors updated dividend policy from 70% to 80% payout. Our next dividend distribution subject to approval by the shareholders General Assembly will be approximately 14, our third share with a payment date you on may 14th.
Speaker Change: It is worth noting that bezeq dividend payments have increased about 20% per year since 2022.
Speaker Change: Moving to slide 16, we show the group guidance for 2025.
In 2024, we met our target except for a 2% Miss on adjusted EBITDA, mainly due to the impact of the war yet.
Speaker Change: Yet the implied adjusted EBITDA minus Capex of $1 97 billion chickens will slightly higher than the implied guidance due to lower capex in 2024 for 2025, we are forecasting adjusted EBITDA of $3 7 billion shekels adjusted net profit of $1 2 billion shaken capex.
<unk> of $1 75 billion Jacobs.
Speaker Change: Fiber deployments of $2 9 million households.
Speaker Change: Turning to the next slide we show our updated midterm targets.
Speaker Change: Let me highlight a few changes from last year, we have added core revenues target growth of two 3%.
Speaker Change: Updated adjusted EBITDA compounded average growth rate of 2% an increase in adjusted EBITDA minus capex of $500 million Jacobs compared to the previous range of 400 to 500 meters.
Speaker Change: Lastly added yes article from subscriber target of 190 195 shake.
Speaker Change: Note that 2000 2040 as the base year for all our targets.
Speaker Change: Moving to the next slide we remain committed to our ESG program and targets. We are dedicated to strong corporate governance with polythene ethics and prevention of corruption among others, both within the group and with our subsidiaries <unk> and <unk>.
Speaker Change: Suppliers I will now turn the call over to Neil who will share more detailed results from our fixed line operations.
Neil: Thank you Lee on the next slide Bezeq.
Neil: Bezeq fixed line revenue increased 1% to $3 8 billion shekels menu needed to higher revenues from broadband services broadband retail fiber customers reached 546000 today and upper rose six 4% to 130.
Neil: Free checking in.
Neil: In the first quarter on the following slides we show moderate decrease.
Neil: Adjusted EBITDA and adjusted net profit.
Neil: 24, mainly due to lower telephony revenues, resulting fold the MLC salary reduction in 2023.
Neil: Turning to the next slide we show growth in adjusted <unk>.
Neil: EBITDA and adjusted net profit.
Neil: The fourth quarter due to the reversal of the provision of new.
Neil: On the vessel side their phone as well as lower operating and salary expenses turning to the next slide.
Neil: First quarter or.
Neil: So 2% growth in broadband revenues.
Neil: Five degrees and also salaries from use of the passive network.
Neil: Moving to the next slide we show the pickup trends Q4 so.
Thousands retail fiber net adds.
Neil: So 2000 and also fiber methods.
Neil: Turning to the next slide we show continued fiber deployment and the result of our increased focus on takes up to today, we have approximately two points.
Neil: Full mainly on homes and over 850000 active subscribers in our fiber networks today, resulting on these scenarios our take up.
Reach is.
Neil: Rich.
Neil: 32%.
Neil: The next slide shows continued revenue drove.
Neil: Growth in transmission and data communication.
Neil: Identifying revenues declined mainly due to the MLC salary reduction in July 2023, and other revenues were impacted lower revenues from infrastructure projects.
Neil: On the next slide shows a 4% decrease in.
Neil: Operating expenses due to lower subcontractor and employees expenses as well as lower.
Neil: Internet connected fees, resulting from a decrease in salaries and other expenses decreased due to a onetime provision of the future ground to employees recorded in 20th century.
Speaker Change: With that I will now turn the call to <unk> to discuss telephone MBS. Thank you here Tobey I'd like to join them on their good wishes already expressed by Tomorrow and wish you. The best of luck in year on year position.
Speaker Change: I would also like to congratulate you high on his appointment as.
Speaker Change: Group CFO and hours on his appointment as the new CFO, California years.
Speaker Change: Good luck for you both.
Speaker Change: Moving to slide slide 27 telephone posted its highest revenues from services.
Speaker Change: Seven years, reaching $1 4 billion very closely despite the impact of the war on roaming revenues, which.
Speaker Change: He is estimated at 55 million shekels for 2024.
Speaker Change: Five two subscriber plans continue to grow with 208000 net adds during the year.
Speaker Change: Moving to the next slide we show five juices fiber plants reached approximately one 3 million subscribers as of today.
Speaker Change: Scrubbers on Pfizer's plans amounted to 55% of pasta subscribers.
Speaker Change: On the next slide we show adjusted EBITDA increased one 3% after adjusting for the impact of the war and roaming revenues adjusted EBITDA would have increased by 5%.
Speaker Change: Moving to the quarterly results on slide 30 revenues rose eight 5% due to higher roaming revenues compared to the corresponding quarter, which were impacted by the war.
Speaker Change: And the continuing growth in postpaid subscribers, including five just as thorough plans.
Adjusted EBITDA and adjusted net profit showed strong growth, mainly due to higher revenues and the reversal of the provision for the universal fiber.
Speaker Change: The next slide shows the Q4 key operational metrics.
Speaker Change: We recorded an additional increase in postpaid subscribers, including five new subscriber plans and decline in prepaid.
Speaker Change: Due to the impact of the war ARPA rose seven 1% or three shake out year over year due to higher ARPA consoler plants and roaming revenues.
Speaker Change: Turning to yes on slide 32, we showed state revenues for the fifth consecutive quarter. The revenues were impacted by increased competition and the war, mainly the non billing of customers in the landfill estimated at $20 million.
Speaker Change: Shekels in 'twenty 'twenty, four partially offset by higher revenues from the TV and fiber bundle.
Speaker Change: We continued immigration from satellite to IP with over 473000 IP customers today.
Speaker Change: Fiber continues to grow.
Speaker Change: And we have now over 80000 fiber subscribers as of today.
Speaker Change: So continued growth in the IP based CV subscribers, which increased 19% year over year as of today, 84% of your subscribers are watching TV. So IP.
Speaker Change: Moving to the next slide adjusted EBITDA and adjusted net profit were down in 2024, mainly due to the decrease in revenues on.
Speaker Change: On the next slide free cash flow in the fourth quarter was affected by timing differences in working capital and higher Capex on slide 35, We show, yes Q4.
Tony: The operational metrics this quarter, we began providing our pool from subscribers, which grew by four circles year over year due to higher revenues from a TV and fiber bundle. We also recorded strong growth in fiber subscribers, which almost doubled year over year with that let me now turn the call back to Tony.
Tony: Thanks, Ilan moving onto Bezeq international revenues and profitability metrics were impacted by lower consumer ISP revenues due to the MLC unified Internet regulatory reform as well as lower ILD revenues. The decrease was partially offset by higher ICT revenues from cloud and data center.
Tony: The fourth quarter, we reached an agreement for further employee retirement for the years 2025 through 2027, which will allow for further cost reduction at Bezeq International.
Tony: On Slide 37, we show the annual result, adjusted EBITDA decreased 11, 1%, mainly due to lower revenues adjusted net profit rose, 2% due to decrease in depreciation expenses moving to the next slide the fourth quarter revenues continued to decline, but adjusted EBITDA was state.
Tony: A little over a year in free cash flow was positively impacted by timing differences in working capital a decrease in capex and lower employee severance payments compared to Q4 of 2023.
Tony: Turning to the last slide we are satisfied with our business and financial performance and with Siemens in 'twenty, 'twenty, four which was a challenging year for Israel and the region.
Tony: We remain focused on executing on our strategy throughout our core activities and key growth drivers robust fiber taken basic and yes continued both in basic data business as well as consistent growth in five days ascribe a plant at Delhi.
Tony: Finally, with all the sudden I mentioned that they think will be attending the Jefferies Pan European mid cap conference on March 25th Fernando.
Fernando: That I would open the Q&A session. If you would like to ask a question. Please raise your hand there truly.
Fernando: As you hear your name please be sure one youre, Mike and ask your question for the benefit of people in the room, please introduce yourself and share the name of the company you represent.
Fernando: We will address questions as we see the hands ways I will now pass to poll for questions.
Fernando: Okay.
Fernando: Yeah.
Fernando: We have a question from David Kaplan IDT.
Fernando: Hi, David Kaplan from side.
David Kaplan: So I got securities based in Tel Aviv.
Fernando: A quick question I guess.
Fernando: For for curtailment on the regulation.
Fernando: You mentioned the removal of structural separation.
Currently the regulatory environment is benign can.
Fernando: Can you talk to us a little about what's going on with being discussed and what is in the pipeline.
Fernando: For the next year to year to two years.
Speaker Change: Sure and thanks, David.
Fernando: Look.
Fernando: Just recapping our regulatory comments I made some last year, we have seen a very rush and not a regulatory approach.
Fernando: It's growing competition in the market over the past three years, and especially as it relates to telecom infrastructure. Both on on refinance so are we.
Fernando: We see.
Fernando: Better approach over the past few years it started with the removal of structural separation of between the fixed line infrastructure and the ISP. She's now multi almost fully marriage with 90% of Bezeq fixed line infrastructure customer have a unified service.
Fernando: With ISP and desperation basically dongguan.
Fernando: And in the past two years, we've also seen rational approach to the wholesale market.
Fernando: Pretty consistent with what we see in Europe.
Speaker Change: <unk> mentioned in the active market and more focus on the capacity. The same as you saw in the hearings in RFID published idea most in the past 12 months.
Speaker Change: As it relates to the structural separation, which is really part of this evolution of the more rational market consistent with what we see in Europe.
Speaker Change: Nine months ago, the minister of communication and knowledge.
Speaker Change: Many years ago, not actually we did that.
Speaker Change: Topics.
Speaker Change: Formally reviewing mobile a structural separation and as part of the 2020 for woodlands.
Speaker Change: We are in Beaumont active discussion.
Speaker Change: Munis jurors around the topics.
Speaker Change: Too early to put a timeline on that so we're not putting any timelines, which we also announced a couple of times that we are in discussions.
Speaker Change: With our unions as both better can you ask.
Speaker Change: Both understand what the Union employees company wide the right thing to do both for companies and for the consumers.
Speaker Change: What kind of have one service unified service one for service and obviously potentially slightly lower price is usually get with bundle or the regulators understand that and we will update the market as soon as we have more updates on the block.
Speaker Change: Great. Thanks, I appreciate that.
Speaker Change: And I'll, just one kind of get in or get a question about the guidance that you gave.
Speaker Change: The guidance was relatively in line with where consensus already was for the coming years.
How much of that is related to competitive pressures how much of that is related to the geopolitical machinations and how much of that is related to b.
Speaker Change: David regulatory continued reduction in AG season and.
And such.
Speaker Change: You were to neutralize the effects.
Speaker Change: Where do you think do you think that guidance could actually be above what you did.
Speaker Change: So let me break down some of the Collins Amin.
Speaker Change: You know when you made that you know the market extremely well.
Speaker Change: First our core revenues do not include Interconnects phases. So when we guide for core revenue growth. It does include the interconnection between the legacy ISP at Bezeq International and telephony.
Speaker Change: All of these together are roughly 10% of revenue.
Speaker Change: So core revenue excludes interconnect and interconnected to wash it doesn't really impact the bottom line or EBITDA.
Speaker Change: So we take into account really are the drivers and the Kpis, we mentioned around fiber <unk> and PV. When we look at our EBITDA growth and Capex reduction, which predominantly come from.
Speaker Change: By end of this year, we finished a fiber product we have done from a satellite which youll see in Opex next year, and we are reducing our employees across betting International X line.
Speaker Change: All of our union agreements in both companies.
Speaker Change: This will come into effect this year and more into effect next year that all to come into the midterm plan in terms of this year.
Speaker Change: Like last year, we did take into account some gradual recovery and some war impact given the volatility.
Speaker Change: Geopolitical volatility, but the impact on the business not material at all we also have some events this year like.
Speaker Change: The elimination of the discount of the <unk> spectrum.
Speaker Change: A telephone.
Speaker Change: Going to increase opex by $40 million to $50 million Chico's. So this is a one off impact compared to last year.
Speaker Change: And Thats part of the Andrew sorry.
Speaker Change: Alright.
Speaker Change: And we have also a big candidate the government may come later this year that impact this year, but we've been pretty cautious on giving guidance to the market this year, but where we stand very confident behind it.
Speaker Change: Last year that you are now.
Speaker Change: When we budgeted in early 2024, we did not answer we're taking into account a full year for I don't think anyone did so we were more cautious and calculated this time.
Speaker Change: Great. Thanks very much.
Speaker Change: Thank you David next question from Tavy Rosner.
Tavy Rosner: Hi, Debbie.
Speaker Change: Yeah.
Speaker Change: Hey, guys. Thanks for taking my questions.
Speaker Change: I only have two short ones. Please.
Speaker Change: First one around regulation, so you mentioned structural separation.
Speaker Change: What else is in the pipeline from the MLC perspective, I mean, we saw headlines about.
Speaker Change: Passive regulation for wholesale Internet.
Speaker Change: What else should we be looking at in 2024.
Speaker Change: So.
Speaker Change: As it relates to the group really that two or three important elements that are on David off the most in the coming year or two one is really spectrum fees that are up but potentially go down when we are in discussion with them will see why understand the needs of the shuttle market the guest spectrum to where they were last year.
Speaker Change: That's number one number two as you mentioned is the wholesale rates. This there wasn't an RFP a request for information that was published by the MLC last month's debt evaluating whether there is a need to even regulators.
Speaker Change: Active wholesale prices, which as I mentioned before very consistent with what you've see in Europe.
Speaker Change: Well.
Speaker Change: There was a reduction in early 2024 in the past they've also.
Speaker Change: Right. So we don't expect.
Speaker Change: Additionally, our significant reduction there or at all.
Speaker Change: And the last one is really structural separation, which I mentioned in active working for us.
Speaker Change: We don't do not believe this should continue to exist.
And we are in the form of dialogue with the MMC and hopefully will yield results.
Speaker Change: In the near term.
Speaker Change: Thanks for that and then lastly.
The competitive dynamics I guess in the wireless market Senator.
Speaker Change: Do you feel that all the players are into more for more aspect. They wanted just trying.
Speaker Change: To get as much as possible and not really compete on pricing these days.
Speaker Change: Yeah, I think one thing I'll mention on that any guidance, if you drag, but look I think what you've seen over the past probably two or three years in a rational.
Speaker Change: Pricing environment with rational player competition is high.
Speaker Change: The prices for telco services. It is about our CLO, so a lot of upside there.
Speaker Change: But there's still competition I don't think Theres a lot of shifts between market shares both in the fixed line and wireless.
Speaker Change: Although nowadays.
Speaker Change: Number two in the market I think net net.
Speaker Change: Over the years, we don't see major shifts.
Speaker Change: <unk> market share.
Speaker Change: <unk> had with our pool, but slowly gradually.
Speaker Change: Pretty significant competition.
Speaker Change: For significant market two or three additional wells.
Speaker Change: So that's.
Speaker Change: Has the competition, but.
Speaker Change: With graduate rising.
Speaker Change: Upon relative.
Speaker Change: Versus last year by.
Speaker Change: <unk>.
Speaker Change: Over the past two years, now and everything back to Shanghai.
Speaker Change: So that's not bad at all.
There is a healthy competition in all three segments instead.
Speaker Change: So theres nine players so still.
Speaker Change: Competition also and of course in television all over the World and sports in Israel, There is fire fares and Israel only only.
Speaker Change: Israeli.
Speaker Change: <unk> companies, but there is more and more competition from from foreign companies and of course in fibers. So so its a healthy competition and we believe it will.
Speaker Change: Okay.
Speaker Change: Looking at Epsilon, we talk about <unk>, we are.
Speaker Change: Yeah.
Speaker Change: Customers from forward she plans to <unk> in there.
Speaker Change: To take the Arco.
Speaker Change: Yeah.
Speaker Change: Great. Thanks, guys, that's all for me and I'll find it.
David Kaplan: Tobey best of luck with your next.
Speaker Change: Uh huh.
Speaker Change: Challenges and adventures.
Speaker Change: Thanks, guys.
Speaker Change: They can match study around the question Youre right.
Andreas <unk> from UBS.
Speaker Change: Alex.
Speaker Change: Hi, everyone I'm Jay here from UBS.
Speaker Change: Best wishes to you Tobey.
Speaker Change: Good luck.
I want to touch upon the guidance. Please so I guess, primarily around your adjusted EBITDA guidance.
Speaker Change: It doesn't make much sense EBIT number when you are now, giving us guidance on revenues right, where it should be.
Speaker Change: Growing at two 3%. So these are usually I would say if I look at where the growth is coming from I'm, sorry, a pretty profitable.
Speaker Change: The fiber business, primarily but then also.
Speaker Change: You guys already spoke about in terms of what should drive the profitability going forward. It is.
Speaker Change: Union agreement it is things like the satellite shutdowns et cetera. So all of these things should improve in profitability.
Speaker Change: You are at the same time and finished 24 with a bit the guidance of let's say EBITDA margin of 42% roughly.
Speaker Change: You are guiding for that margin to improve but at the same time and given all that I said you are still guiding for the dog.
Speaker Change: Alright.
Speaker Change: Growth.
Speaker Change: Kind of below what you are guiding for on the revenue side. So I just wanted to understand.
Speaker Change: The reason for that is.
Speaker Change: Sure.
Speaker Change: Taking all of this town.
Speaker Change: Quite a bit.
Speaker Change: Okay got it.
Speaker Change: Probably quite.
Speaker Change: So that is one area of <unk>.
Speaker Change: Because that's what I wanted to kind of challenge you that on in a second.
Speaker Change: Second question more on the Capex side so.
Speaker Change: Got it.
Speaker Change: Great.
Speaker Change: He kind of celebration presented 27 target.
Speaker Change: 16% at the bottom so just looking at your.
Speaker Change: Kind of industry peers that would still appear to be pretty high given that you are already.
Speaker Change: Ending.
Speaker Change: Or will have ended the library campaign, which is usually the most complex and sensitive part of any.
Speaker Change: Incumbent as Youre kind of at the.
Speaker Change: And of the <unk> are approaching the end of the <unk> upgrade cycle, So why would not.
Speaker Change: The ratio be kind of safely below that intend to them at the time that would be my second question. Thank you.
Speaker Change: I'll start with EBITDA and I'll, let there'll be also touch capex.
Speaker Change: We are guiding to 2% to 3% growth in core revenues.
Speaker Change: 2% CAGR and EBITDA on average for the next for the midterm, which is three to five years.
Speaker Change: Revenues excludes two very profitable declining.
Speaker Change: Items, such as telephony and ISP, both very high quality businesses. So when you think about it.
Speaker Change: And exactly your question, Okay, one to one.
Speaker Change: Alright, and noncore revenues are less 10% declining quickly on the revenues, but it was a great drop in revenues from claims and Thats the impact that you see.
Speaker Change: Between these numbers in the midterm.
Speaker Change: The major opex items being pulled out of the business, putting aside the ARPA growth.
Speaker Change: The growth is really a satellite and employees.
Speaker Change: You will see run rates for year end 2026 right.
At the end of the satellites, we trust that will basically be happening Q1, 2026. So the major opex item. When you do a pullout only end of Q1 2006, Youll see it really impacting yes opex in 2026 for the year, you will see almost 300 employees going out of the Bezeq fixed line business.
Speaker Change: Part of the Union agreements end of this year, which.
Speaker Change: Flows into 2026, well and few other very important items.
Speaker Change: Part of our drivers, but that's kind of I think answer to your question both on the main opex item.
Speaker Change: And the explanation between the delta of 2% to 3%.
Speaker Change: We also have.
Speaker Change: Salaries tied to CPI.
Speaker Change: Got it.
Speaker Change: <unk>.
Speaker Change: But we are working on efficiency.
Speaker Change: AI projects across the group, which was awesome.
Speaker Change: Opex reduction is non headcount opex reduction.
Speaker Change: So the Capex question sure.
Speaker Change: On Opex.
Speaker Change: We said before.
Speaker Change: C J F 35, with the 175.
Speaker Change: <unk> chicken.
Speaker Change: The state level.
Speaker Change: But in the.
Speaker Change: This year as we move.
Speaker Change: Hello.
Speaker Change: Hard to say, rather decline, especially as we.
Speaker Change: Complete the fiber deployment and reached $2 9 million households, but the first full year, where we would see that decline is going to be 'twenty 'twenty seek and that's going to be a gradual decline will decline because we still have.
Speaker Change: Some caps going into growth areas, such as <unk> and a phone that will continue for us.
Speaker Change: Some time.
Speaker Change: The sooner that we need to get to allow for full sensation at yes.
Speaker Change: We are going down on it remember from 20% Capex to change now to the range of beginning at the beginning of the teams in 17 than 16, not calling for a specific percentage for.
Speaker Change: Specific year take into account that same time ready to start coming down total revenues.
Speaker Change: Noncore revenues, but as a result.
Speaker Change: Sales of interconnected seasonally that's the one that we saw higher capex to sales ratio.
Speaker Change: By my calculation.
Bob Mcmahon: Thank you Bob if I could follow up.
Speaker Change: With the.
Speaker Change: Maybe just a follow up bottom up cost items are specific Lady.
Speaker Change: Subcontractor costs, which would have been up quite a bit as a result of the fiber campaign. So.
Speaker Change: Just look historically kind of something that's grown by about 100 million calls over the past two years.
Speaker Change: It is.
Speaker Change: The the level that we should think of going forward.
Speaker Change: Similar to the one that we signed a Pos or is there something that should.
Speaker Change: Have the subcontractor costs Bill.
Speaker Change: Above or significantly above $100 million per year, so that would be one kind of follow up on the opex side.
Speaker Change: And then maybe Toby just on Capex. So you guys have clearly achieved more homes cost than you initially guided for with actually even less capex than you I think initially guided twice it would be interesting to just hear from you.
Speaker Change: How are you actually achieve that thank you.
Speaker Change: Thank you so for the first question on subcontractor cost at once you are referring to are the cost of actually connecting households, with fiber network because the cost of deploying are mostly capitalized and those collection of households are going to come down over time.
Speaker Change: Because.
Speaker Change: Although there are few people without fiber and now they are moving to fiber for the first time from copper.
We will continue to see that there is a clause in.
Speaker Change: In our.
Speaker Change: Okay.
Speaker Change: As we move alone.
Speaker Change: We'll be more churn from different layers that they already have.
Speaker Change: Fiber connections. So we don't have to spend again, a subcontractor cost so overtime nasty.
Speaker Change: Specifically certain amount, but that should go down over time over the years as for the second question on.
Speaker Change: On the Capex, yes, the no part of the the answer is what you just mentioned we've been able to achieve our deployment goals on fiber at lower costs than originally expected, we have become more and more efficient here.
Speaker Change: To be fully open with you we have also had some.
Speaker Change: Timing differences in Capex payments that shifts from one year to the other.
Speaker Change: And that's also a part of the young system will be.
Speaker Change: You will see some of those components in 2005, yet as you've seen in our guidance.
Speaker Change: We are not increasing the capex for.
For 2000.
Speaker Change: And then thanks again and best of luck to you guys.
Speaker Change: Thank you very much.
Speaker Change: Okay.
Speaker Change: If there are if there are no further questions.
Speaker Change: I would like to thank you all for taking the time to join us today.
Speaker Change: Should you have any follow up questions. Please feel free to contact our Investor Relations Department.
Thank you.
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