Q1 2026 Bezeq Israeli Telecommunication Corp Ltd Earnings Call

May 13, 2026

Speaker #1: Welcome everyone and thank you for joining us for Besik's first quarter earnings call. First, we apologize for the inconvenience caused by the technical difficulties.

Speaker #1: We are hosting a single conference call in English today, for Hebrew speakers there will be time to ask your questions in Hebrew at the end of the English Q&A session.

Speaker #1: I am the CFO of the Besik Group, joining me today are Mr. Rans Ar, Executive Chairman; Mr. Nir David, CEO of Besik Fixed Line; and Mr. Kobe Maiman, CEO of Pelofone.

Speaker #1: Before we begin, please review the Safe Harbor statement on slide 2 of our presentation, which applies to any statement made during today's call. Following our prepared remarks, we will open the call for Q&A.

Speaker #1: With that said, let me now turn the call over to Ran for his opening remarks. After his introduction, I will continue with the presentation of our group's financial highlights, followed by Nir, who will discuss Fixed Line results and Kobe, who will cover the results from Yes.

Speaker #1: I will conclude the presentation with Besik International. Thank you. Hi, I am glad to see all of you joining us today. Apologies for the inconvenience; our excellent results are further evidence of the group's strength.

Speaker #1: The new strategy and the ambitious targets we have set for ourselves are clearly reflected in our operational and financial performance. We have already recorded free cash flow growth of 74% in the first quarter, along with continued growth in comparable EBITDA and net profit.

Speaker #1: We have reached a significant milestone with the deployment of fiber infrastructure to 3 million households, a figure that establishes Besik as Israel's digital backbone.

Speaker #1: Together with our investment in national infrastructure, we are advancing with determination on several new subsea cable projects to Europe. These initiatives of mission-critical infrastructure for the global economy will position Israel as a regional and global digital hub and generate a strategic growth engine for the coming years.

Speaker #1: To ensure continued benefits for the Israeli consumer, it is time to remove the structural separation and complete the required regulatory reforms. Following the formal steps taken by the Ministry of Communications in the past few months, we are awaiting a decision on this matter soon.

Speaker #1: These steps will enable us to operate as a single, more efficient, and innovative group, benefiting both our customers and our shareholders. Let's now move to slide 3, where we show the Q1 highlights.

Speaker #1: Core revenue grew 2.6% to over $2 billion shekels. Comparable EBITDA grew 1.2%, and comparable net profit grew by over 4%, driven by higher revenues.

Speaker #1: As mentioned, free cash flow grew 74%, mostly due to a tax refund received in the current quarter. Changes in working capital and improved core activities.

Speaker #1: Fiber subscribers were up 19%, and our take-up up reached 35% with 3 million homes passed. 5G continued to drive cellular market performance, and subscriber plans were up 12% year over year.

Speaker #1: Our pool increased across broadband and TV. We signed an MOU to establish and operate an international cable system to create a telecom corridor between East and West via Israel.

Speaker #1: We hope to have more on this exciting opportunity later in the year. Turning to the slide, we see the tech and business roadmap on track to deliver our 2026 KPIs from increased fiber deployment and take-up, expansion of 5G, and growth in the TV and fiber model.

Speaker #1: We are building for durable growth, superior customer experience, and operating efficiency. On the slide, we summarize our Q1 financial achievements, including a $2.6% reduction in net debt.

Speaker #1: On slide 6, we highlight our key KPIs in each of the businesses, with broadband retail continuing to grow year over year. We recorded an increase in growth and revenues from transactions.

Speaker #1: Pelofone grew 5G subs to 1.45 million, and 5G Max subs plans grew to 184,000 today. We expect to reach more than 300,000 5G Max subscribers by year-end.

Speaker #1: I will now hand it back to you to review our financials in more detail. Thank you. Turning to the slide for the group's Q1 highlights.

Speaker #1: All key metrics, including revenues, consolidated net profit, and free cash flow, show strong growth this quarter, although Fixed Line CapEx was down by 8.2%.

Speaker #1: Group CapEx was slightly up due to timing differences in Yes. Moving to the next slide, we show our operating expenses. Salary expenses decreased by 3.8% due to the sale of Besik Online and its deconsolidation as of Q2 2025.

Speaker #1: Operating expenses were down mainly due to lower interconnection expenses. Other expenses were impacted by provisions for employee retirement in Besik Fixed Line and Besik International.

Speaker #1: On slide 9, we show our quarterly operational metrics. We recorded growth in Pelofone subscribers and also broadband subscribers, along with higher retail broadband ARPU and Yes.

Speaker #1: The group retail broadband subscribers increased by 1%, although Fixed Line retail broadband subscribers decreased in Q1. Slide 10 highlights our balanced capital structure, net debt decreased by 122 million shekels to 4.6 billion.

Speaker #1: 1.4 times. This month, the Israeli rating agency reiterated our strong rating with a stable outlook. Turning to shareholder remuneration on slide 11. Tomorrow, we will pay a cash dividend of $549 million shekels, representing 80% of the net profit in the second half of 2025.

Yohai Benita: With a net debt to comp EBITDA ratio of 1.4x. This month, the Israeli rating agency reiterated our strong double A rating with a stable outlook. Turning to shareholder remuneration on slide 11, tomorrow we will pay a cash dividend of ILS 549 million, representing 80% of the net profit in H2 2025. In addition, we began our share buyback plan of ILS 150 million to be completed in 2026. As of today, we completed approximately 50% of the total plan. On slides 12 through 14, we show our 2026 outlook and 2029 targets, which are unchanged. We will continue to focus on maintaining our double A level rating and strive to increase shareholder remuneration. I will now hand the call to Nir for his fixed line results.

Speaker #1: With a net debt to Comp EBITDA ratio of 1.4 times. This month, the Israeli rating agency reiterated our strong double A rating with a stable outlook.

Speaker #1: Turning to shareholder remuneration on slide 11, tomorrow we will pay a cash dividend of 549 million shekels representing 80% of the net profit in the second half of 2025.

Speaker #1: In addition, we began our share buyback plan of $150 million shekels to be completed in 2026. 50%. On slide 12. We show our 2026 outlook and 2029 targets, which are unchanged.

Speaker #1: In addition, we began our share buyback plan of 150 million shekels to be completed in 2026, as of today we completed approximately 50% of the total plan.

Speaker #1: On slides 12 through 14 we show our 2026 outlook and 2029 targets which are unchanged, we will continue to focus on maintaining our double A level rating and strive to increase shareholder remuneration.

Speaker #1: We will continue to focus on maintaining our double-level rating and strive to increase shareholder remuneration. We will now call for questions. We open 2026 with strong results, reflecting continued and consistent growth across all core metrics.

Speaker #1: I will now hand a call to Nir for fixed line results.

Speaker #2: Thank you, Yochai. We open 2026 with strong results reflecting continual and consistent growth across all core metrics. Turning to slide 15, fixed line core revenue increased 2.5% to approximately 1 billion shekels driven by higher revenue from transmission and data communication broadband cloud and digital services.

Nir David: Thank you, Yochai. We opened 2026 with strong results reflecting continued and consistent growth across all core metrics. Turning to slide 15, fixed line core revenue increased 2.5% to approximately ILS 1 billion, driven by higher revenue from transmission and data communication, broadband, cloud and digital services. Fiber deployment continue as we reach 3 million homes passed with a take-up rate of 35%. On the following slide, we show Q1 financial highlights. Comparable EBITDA and comparable net profit each rose 1.5%, driven by higher core revenue, largely offset by lower telephony revenue. CapEx was down by 8.2% and free cash flow grow significantly to ILS 404 million, an increase of 84%, mainly due to tax refund received in the current quarter. Lower CapEx and exchange in working capital.

Nir David: Thank you, Yohai. We opened 2026 with strong results reflecting continued and consistent growth across all core metrics. Turning to slide 15, fixed line core revenue increased 2.5% to approximately ILS 1 billion, driven by higher revenue from transmission and data communication, broadband, cloud and digital services. Fiber deployment continue as we reach 3 million homes passed with a take-up rate of 35%. On the following slide, we show Q1 financial highlights. Comparable EBITDA and comparable net profit each rose 1.5%, driven by higher core revenue, largely offset by lower telephony revenue. CapEx was down by 8.2% and free cash flow grow significantly to ILS 404 million, an increase of 84%, mainly due to tax refund received in the current quarter. Lower CapEx and exchange in working capital.

Speaker #1: Turning to slide 15, Fixed Line core revenue increased 2.5% to approximately $1 billion shekels, driven by higher revenue from transmission and data communication, broadband, cloud, and digital services.

Speaker #1: Fiber deployment continues as we reach $3 million homes passed with a take-up rate of 35%. On the following slide, we show Q1 financial highlights.

Speaker #2: Fiber deployment continued as we reach 3 million homes past with a take-up rate of 35%. On the following slide we show Q1 financial highlights.

Speaker #1: Company net profit rose 1.5%. This was driven by higher core revenue, partially offset by lower telephony revenue. CapEx was down by 8.2%, and free cash flow grew significantly to $404 million, an increase of 84%, mainly due to a tax refund received in the quarter, lower CapEx, and changes in working capital.

Speaker #2: Comp EBITDA and Comp Net Profit each rose 1.5% driven by higher core revenue partially offset by lower telephony revenue. CAPEX was down by 8.2% and free cash flow grew significantly to 404 million shekels and increase of 84% mainly due to tax refund received in the account quarter.

Speaker #1: Turning to the next slide, we show continued fiber deployment reaching approximately $3 million homes passed with over $1 million. Fiber network representing. 65% of total broadband subscribers and a take-up rate of 35%.

Speaker #2: Lower CAPEX and exchange in working capital. Turning to the next slide we show continued fiber deployment reach approximately 3 million homes past with over 1 million active subscribers on our fiber network 65% of total broadband subscribers and take-up rate of 35%.

Nir David: Turning to the next slide, we show continued fiber deployment, which approximately 3 million homes passed with over 1 million active subscribers on our fiber network today. They're representing 65% of total broadband subscriber and take-up rate of 35%. Retail broadband ARPU continued to grow and rose to 3.7% year-over-year to ILS 139. Moving to slide 18, we show the take-up trend. The take-up trend, fiber take-up reach 645,000. Wholesale fiber take-up reach 395,000 today. Turning to the next slide, broadband revenue were up 8% driven by growth in ARPU and the wholesale revenues.

Speaker #1: Retail broadband continues to grow, rising 3.7% year over year to 139 shekels. Moving to slide 18, we show the take-up trend. Regarding the take-up trend, fiber take-up reached $645,000.

Speaker #2: Retail broadband ARPU continued to grow and rose 3.7% year over year to 139 shekels. Moving to slide 18, we show the take-up trend: fiber take-up reached 645,000, and wholesale fiber take-up reached 395,000 today.

Speaker #1: Fiber take-up reached $395,000. Moving to the next slide, broadband revenue is up 8%, driven by growth in units and related revenues. Transmission and data revenue grew 3.6% to $330 million due to higher revenues from transmission services, and cloud and digital revenue grew 1.6%.

Speaker #2: Turning to the next slide, broadband revenue was up 8%, driven by growth in ARPU and wholesale revenues. Transmission and data revenue grew 3.6% to 330 million shekels, due to higher revenues from metro transmission services. Cloud and digital revenue grew 1.6%, driven by higher revenues from virtual exchanges and cloud services.

Nir David: Transmission data revenue growth 3.6% to ILS 330 million due to higher revenues from metro transmission services and cloud and digital revenue growth 1.6%, driven by higher revenues from virtual exchanges and cloud services. With that, I will now turn the call to Ilan to discuss Pelephone and Yes.

Speaker #1: Revenues from virtualization and cloud services. With that, I will now turn the call to discuss, and yes, thank you, Nir. Turning to slide 20, we start with telephony's performance in the first quarter.

Speaker #2: With that I will now turn the call to Ilan to discuss telephone and yes.

Speaker #1: As shown, revenues, company EBITDA, and company net profit were impacted by a decline in roaming revenues as a result of the war with Iran.

Speaker #1: Thank you, Nir. Turning to slide 20 I'll start with telephones performance in the first quarter. As shown revenues Comp EBITDA and Comp Net Profit were impacted by a decline in roaming revenues as a result of the war with Iran.

Ilan Sigal: Thank you, Nir. Turning to slide 20, I'll start with Pelephone's performance in the first quarter. As shown, revenues comp EBITDA and comp net profit were impacted by a decline in roaming revenues as a result of the war with Iran. When adjusting for this impact, revenues from services would have increased by approximately 2%, reflecting the underlying strength of the business. We delivered strong subscriber momentum this quarter. postpaid subscribers increased by 34,000, marking our strongest quarterly growth since Q2 2018. 5G postpaid subscribers grew by 50,000, reaching approximately 1.45 million or 61% of postpaid subscribers. In parallel, 5G MAX subscriber plans continued to expand, reaching 184,000 today, reflecting customers' increasing demand for premium connectivity. We are now targeting 300,000 5G MAX subscribers by year-end.

Speaker #1: When adjusting for this impact, revenues from services would have increased by approximately 2%, reflecting the underlying strengths of the business. We delivered strong subscriber momentum this quarter.

Speaker #1: When adjusting for this impact revenues from services would have increased by approximately 2% reflecting the underlying strength of the business. With deliberate strong subscriber momentum this quarter post paid subscribers increased by 34,000 marking our strongest quarterly growth since Q2 2018.

Speaker #1: Postpaid subscribers increased by 34,000, marking our strongest quarterly growth since Q2 2018. 5G postpaid subscribers grew by 50,000, reaching approximately 1.45 million, or 61% of postpaid subscribers.

Speaker #1: 5G post paid subscribers grew by 50,000 reaching approximately 1.45 million or 61% of post paid subscribers. In parallel 5G max subscriber plans continued to expand reaching 184,000 today reflecting customers increasing demand for premium connectivity.

Speaker #1: In parallel, 5G Max subscriber plans continued to expand, reaching 184,000 today, reflecting customers' increasing demand for premium connectivity. We are now targeting 300,000 5G Max subscribers by year-end.

Speaker #1: We saw an improvement in free cash flow, totaling $15 million shekels, compared to a negative free cash flow of $5 million in the first quarter of last year.

Speaker #1: We are now targeting 300,000 5G max subscribers by year-end. We saw improvements in free cash flow totaling 15 million shekels compared to negative free cash flow of 5 million in the first quarter of the last year.

Ilan Sigal: We saw improvement in free cash flow totaling ILS 50 million compared to -ILS 5 million in Q1 of the last year, supported by working capital improvements and disciplined cost management. As expected, given the war-related roaming impact, ARPU declined modestly year over year to ILS 44 or decreased 2.2% or approximately ILS 1. Excluding roaming ARPU trends remained stable. We also continued to drive operational efficiency. During the quarter, we reached an agreement to retire 150 employees over the next 3 years, further streamlining the organization while maintaining service quality. Turning to slide 21, you can see the detailed financial performance this quarter, which reflected this dynamic pressure from roaming revenues offset by strong subscriber growth and improved free cash flow. On slide 22, we highlight continued growth in 5G adoption.

Speaker #1: Supported by working capital improvements and disciplined cost management, as expected, given the war-related roaming impact, it declined modestly year over year to 44, a decrease of 2.2%, or approximately 1.

Speaker #1: Supported by working capital improvements and disciplined cost management. As expected given the war-related roaming impact ARPU declined modestly year over year to 44 shekels or decreased 2.2% for approximately 1 shekel.

Speaker #1: Excluding roaming, trends remain stable. We also continue to drive operational efficiency. During the quarter, we reached an agreement to retire 150 employees over the next three years, further streamlining the organization while maintaining service quality.

Speaker #1: Excluding roaming ARPU trends remain stable. We also continue to drive operational efficiency. During the quarter we reached an agreement to retire 150 employees over the next three years furthering streamlining the organization while maintaining service quality.

Speaker #1: Turning to slide 21, you can see the detailed financial performance this quarter, which reflected this dynamic pressure from roaming revenues. Growth in cash flow on slide 22 highlights continued growth in 5G adoption, with 61% of postpaid customers now on 5G plans.

Speaker #1: Turning to slide 21 you can see the detailed financial performance this quarter. Which reflected this dynamic pressure from roaming revenues offset by strong subscriber growth and improved free cash flow.

Speaker #1: On slide 22, we highlight continued growth in 5G adoption. With 61% of postpaid customers now on 5G plans, we remain well positioned to capture further data and service revenue upside.

Speaker #1: We remain well-positioned to capture further data and service revenue upside. On slide 23, we show that revenues from services were both down slightly in Q1 due to the impact of the war.

Ilan Sigal: With 61% of postpaid customers now on 5G plans, we remain well-positioned to capture further data and service revenue upside. On slide 23, we show revenues from services and ARPU. Both were down slightly in Q1 due to the impact of the war with Iran. Moving to Yes. On slide 24, Yes delivered a strong quarter with revenues growing 7.5% to ILS 343 million, the highest quarterly level since Q1 2019. ARPU reached a record of ILS 202, driven by continued growth in the TV Plus fiber bundle and revenues from the Partner transition-- transaction. Slide 25 highlights our key financial metrics in Q1. Comp EBITDA grew 14% and we transitioned to comp net profit after many quarters of net losses.

Speaker #1: With regard to yes on slide 24, yes has delivered a strong quarter with revenues growing $7.5% to $343 million shekels, the highest quarterly level since Q1 2019.

Speaker #1: On slide 23 we show revenues from services and ARPU both were down slightly in Q1 due to the impact of the war with Iran.

Speaker #1: Moving to yes on slide 24 yes delivered a strong quarter with revenues growing 7.5% to 343 million shekels the highest quarterly level since Q1 2019.

Speaker #1: ARPU reached a record of $202 shekels, driven by continued growth in the TV+ fiber bundle and revenues from the partner transition transaction. Slide 25 highlights our key financial metrics in Q1.

Speaker #1: ARPU reached a record of 202 shekels driven by continued growth in the TV Plus fiber bundle and revenues from the partner transition transaction. Slide 25 highlights our key financial metrics in Q1.

Speaker #1: EBITDA grew 14% and we transitioned to a net profit after many quarters of net losses. Moving to slide 26, fiber subscribers increased to 137,000, while migration to IP continues, with 89% of yes customers now on IP platforms.

Speaker #1: Comp EBITDA grew 14% and which transitioned to Comp Net Profit after many quarters of net losses. Moving to slide 26 fiber subscribers increased 137,000 today while migration to IP continues with 89% of yes customers now on IP platforms with that I'll hand the call back to Yochai for Bezek International's results.

Ilan Sigal: Moving to slide 26, fiber subscribers increased 137,000 today, while migration to IP continues with 89% of Yes customers now on IP platforms. With that, I'll hand the call back to Yochai for Bezeq International's results.

Speaker #1: With that, I will hand the call back to Naim for Bezik International results. Thank you, Naim. Finally, turning to Bezik International on slide 27, Bezik International delivered a solid performance this quarter, with business customer revenues increasing 10% year over year to $263.

Speaker #3: Thank you Ilan. Finally turning to Bezek International on slide 27 Bezek International delivered a solid performance customer revenues increasing 10% year over year to 226 263 million shekels driven primarily by high higher equipment sales and continued growth in cloud activities.

Yohai Benita: Thank you, Ilan. Finally, turning to Bezeq International on slide 27. Bezeq International delivered a solid performance in this quarter, with business customer revenues increasing 10% year-over-year to ILS 263 million, driven primarily by higher equipment sales and continued growth in cloud activity. Comped EBITDA grew 18% and comparable net profit totaled ILS 8 million compared to a net loss of ILS 2 million in the corresponding quarter last year. This improvement was driven by higher revenues alongside disciplined cost management. Bezeq International is well-positioned as demand for cloud data and enterprise connectivity solution continues to grow. With that, I will open the Q&A session. If you would like to ask a question, please raise your hand virtually. As you hear your name, please be sure to unmute your microphone and ask your question.

Speaker #1: Million shekels, driven primarily by high equipment sales and continued growth in cloud activities. EBITDA grew 18% and net profit totaled $8 million, compared to a net loss of $2 million in the corresponding quarter last year.

Speaker #3: Comp EBITDA grew 18% and Comp Net Profit totaled 8 million shekels compared to a net loss of 2 million shekels in the corresponding quarter last year.

Speaker #1: This improvement was driven by higher revenues alongside disciplined cost management. Bezik International is well-positioned as demand for cloud, data, and enterprise connectivity solutions continues to grow.

Speaker #3: This improvement was driven by higher revenues alongside disciplined cost management. Bezek International is well positioned as demand for cloud data and enterprise connectivity solution continues to grow.

Speaker #1: With that, I will open the Q&A session. If you would like to ask a question, please raise your hand virtually. As you hear your name, please be sure to unmute your microphone and ask your question.

Speaker #3: With that I will open the Q&A session. If you would like to ask a question please raise your name please be sure to unmute your microphone and ask your question.

Speaker #1: For the benefit of the people in the room, please introduce yourself and share the name of the company you represent. We will address questions as we see the hands raised.

Speaker #3: For the benefit of the people in the room please introduce yourself and share the name of the company you represent. We will address questions as we see the hands raised.

Yohai Benita: For the benefit of the people in the room, please introduce yourself and share the name of the company you represent. We will address questions as we see the hands raised. I will now pause to poll for questions. Okay, we have a question from Andre from UBS. Hi, Andre. Andre, I think maybe you are on mute. Okay. Next question. Hi, Ilanit. Ilanit Shoff.

Speaker #1: I will open the floor for questions. Okay, we have a question from Andre from UBS. Andre? Andre, I think maybe you are on mute.

Speaker #3: I will now pause to poll for questions. Okay we have a question from Andre from UBS. Hi Andre Andre I think maybe you are on mute.

Speaker #1: Okay. So, next question. How are you? Good. Great. I have a few questions, if I may. Please. The first is about internet. It seems that there is some slowdown in the growth of the retail internet and.

Speaker #3: Okay so so next question. Hi Ilanit Ilanitchev.

Speaker #4: Hey guys.

Ilanit Shoff: Hey, guys.

[Analyst 1]: Hey, guys.

Speaker #5: Hey.

Ilan Sigal: Hey.

Speaker #4: How are you?

Ilanit Shoff: How are you?

[Analyst 1]: How are you?

Speaker #5: Good.

Ilan Sigal: Good. Good.

Speaker #3: Good.

Speaker #4: Great. I have a few questions if I may. The first one is about the Internet ARPU. It seems that there is some slowdown in the growth of the retail Internet ARPU and the I saw in this quarter this is this is the first quarter that I saw that there is an reduction of the B routers.

Ilanit Shoff: Great. I have a few questions, if I may.

[Analyst 1]: Great. I have a few questions, if I may.

Ilan Sigal: Yes.

Ilanit Shoff: The first one is about the internet ARPU. It seems that there is some slowdown in the growth of the retail internet ARPU. I saw in this quarter, this is the first quarter that I saw that there is a reduction of the Be router. My question is, should we expect that slowdown to will be continue, or do you still see room for further ARPU improvement as customers continue migrating from copper to fiber? This is the first question. I have another one about the employees. The first, if we're looking for the last 5 years, you can see that between 2020 to 2025, there were ILS 32 million reduction on the employee expenses.

[Analyst 1]: The first one is about the internet ARPU. It seems that there is some slowdown in the growth of the retail internet ARPU. I saw in this quarter, this is the first quarter that I saw that there is a reduction of the Be router. My question is, should we expect that slowdown to will be continue, or do you still see room for further ARPU improvement as customers continue migrating from copper to fiber? This is the first question. I have another one about the employees. The first, if we're looking for the last 5 years, you can see that between 2020 to 2025, there were ILS 32 million reduction on the employee expenses.

Speaker #1: I saw that in this quarter. This is the first quarter where I saw a reduction in routers. So my question is. Should we expect that slowdown to.

Speaker #4: So my question is should we expect that slowdown to will be continue or do you still see room for few further ARPU improvement as customers continue migrate migrating from Cooper to fiber?

Speaker #1: Continue, or do you still see room for further improvement as customers continue? Migrating to fiber? This is the first question, and I have another one about employees.

Speaker #4: This is the first question. And I have another one about the employee the first if if we're looking for the last five years you can see that between 2020 to 2025 there were 32 million shekels reduction on the employee expenses.

Speaker #1: The first point. If we look at the last year. You can see that between 2020 and 2025 there was a 32 million reduction in employee expenses, but in the same period.

Speaker #1: Number. 15%. And I want to understand two things. First, how do you explain the lower reduction in expenses, and second, what should we look forward to in this regard?

Speaker #4: But the in the same period the number of employee is reduced by 15%. And I want to understand two things. First how do you explain the the lower reduction in the expenses and the other one is what we need to look forward in this area.

Ilanit Shoff: In the same period, the number of employees is reduced by 15%. I want to understand two things. First, how do you explain the lower reduction in the expenses? The other one is what we need to look forward in this area.

[Analyst 1]: In the same period, the number of employees is reduced by 15%. I want to understand two things. First, how do you explain the lower reduction in the expenses? The other one is what we need to look forward in this area.

Speaker #1: I'll start, and the team will chime in, but first on the questions. We see healthy growth. We reached 139. We were hoping to reach 140 next year, but we're going to reach it ahead of time and are currently targeting 150, which is not a result of increased prices.

Speaker #5: Okay I'll I'll start and the team will chime in. But first on the ARPU questions we see healthy growth in ARPU where we reached the top 139 we were hoping to reach 140 next year which we're gonna reach it ahead of time.

Ilan Sigal: Okay. I'll start and the team will chime in. First on the ARPU questions, we see healthy growth in ARPU, where we reached to 139. We were hoping to reach 140 next year, which we're gonna reach it ahead of time, and currently targeting 150. That's not as a result of increased prices, it's a result of the mix that you mentioned of transitioning from copper to fiber. This will continue at least for the next 2, 3 years, as the take-up continue to rise. The speeds also increase, so that's also a trigger for growth in ARPU. There's some seasoning around router sales and there's like a month of 4 as well. There's nothing changing really on that trend as come to routers. On employee side-

Tomer Raved: Okay. I'll start and the team will chime in. First on the ARPU questions, we see healthy growth in ARPU, where we reached to 139. We were hoping to reach 140 next year, which we're gonna reach it ahead of time, and currently targeting 150. That's not as a result of increased prices, it's a result of the mix that you mentioned of transitioning from copper to fiber. This will continue at least for the next 2, 3 years, as the take-up continue to rise. The speeds also increase, so that's also a trigger for growth in ARPU. There's some seasoning around router sales and there's like a month of 4 as well. There's nothing changing really on that trend as come to routers. On employee side-

Speaker #1: It's a result of the mix that you mentioned: transitioning from copper to fiber. It will continue for the next few years as the take-up continues to rise and speeds also increase.

Speaker #5: And currently ter targeting 150. That's not a res a result of increased prices. It's a result of the mix that you mentioned of transitioning from copper to fiber.

Speaker #5: This will continue in the next this for the next two three years at the take up continue to rise and the speeds also increased so that's also a trigger for growth in ARPU.

Speaker #1: There's some seasonality around router sales and months of war as well, but nothing is really changing in terms of trends regarding routers. On the employee side, on one hand, we did reduce headcount by roughly 10% during the years you mentioned, but there is also a 3% increase in employees in the group every year.

Speaker #5: there's some seasoning around router sales and there's like a months of war as well as well but there's nothing changing really on that trends.

Speaker #5: As as it's come to routers on employee side on one hand we did reduce headcount by roughly 10% during the years you mentioned. but there is also the 3% increase in employee salaries in the group every year.

Tomer Raved: On one hand, we did reduce headcount by roughly 10% during the years you mentioned. There is also the 3% increase in employee salaries in the group every year. The salary expenses did go up by almost, you know, ILS 200 million over the period, slightly less than that. What you're gonna see going forward, given the amount of employees, and that's already set within Bezeq, Pelephone, Bezeq International, more than 1,500 employees combined, 14% of the group headcount is actually retiring over the next 3 years. You're gonna see not a reduction in salary expenses, but flat.

Speaker #1: So, expenses did go up by almost $200 million shekels over the period, slightly less than that, but what you're going to see going forward, given the amount of employees already set within Bezik, Pellaphone, and Bezik International, more than 1,500 employees combined, 14% of the group headcount is actually retiring over the next three years, is not a reduction in salary expenses, but they will be flat.

Speaker #5: So they sorry expenses did go up but on by almost you know 200 million shekels over the period. slightly less than that. but what you're gonna see going forward given the amount of employee and that's already set within Bezek Telephone Bezek International more than 1,500 employees combined 14% of the group headcount is actually retiring over the next three years.

Speaker #1: This is going to be the first time in the group in the past two decades that we'll see a few years of flat-ish salary expenses.

Speaker #5: You're gonna see not a reduction in salary expenses but flat. So there's gonna be the first time in the group in the next in the past two decades we're gonna see a few years of flattish salary expenses and we communicated pretty detailed presentations around that in the previous quarter but that's the explanation for what you've seen in the past four years and also in the next four years.

Speaker #1: We communicated this in pretty good detail in the previous quarter, but that's the explanation for what you've seen in the past four years and also in the next four years.

Tomer Raved: This is going to be the first time in the group in the past 2 decades, we're going to see a few years of flattish salary expenses, and we communicated pretty detailed explanations around that in the previous quarter. That's the explanation for what you've seen in the past 4 years and also in the next 4 years. I hope that answered the question.

Speaker #1: I hope that answers the question. I just want to add one more thing. This quarter we had some one-time expenses related to the collective agreements we had in both Bezik and Pellaphone, so that's why you see a slightly higher increase in salary expenses.

Speaker #5: I hope that answered the question.

Speaker #3: I ju I just want to add one more thing that this quarter we had some one-time expenses related to the collective agreement that we had also on in Bezek and in Telephone.

Yohai Benita: I just want to add one more thing, that this quarter we had some one-time expenses related to the collective agreement that we had both in Bezeq and in Pelephone. That's why you see slightly higher increase in salary expenses. If you exclude that, salary expenses more or less would have been stable, although the collective agreement impact, given the retirement programs that we have in the companies in the group.

Speaker #1: But if you exclude that, salary expenses would have been more or less stable, despite the collective agreement impact, considering the retirement programs we have in the companies in the group.

Speaker #3: So that's why you see slightly higher increase in salary expenses. But if you exclude that salary expenses more or less would have been stable although the collective agreement impact giving the retirement programs that we have in the in the company's in the group.

Speaker #1: Thank you, one more question please. Do you have any updates regarding the cancellation of the structural separation? Yes. So, we saw the announcement from the mock regarding the RFI in the past few months, and we are currently having weekly meetings with the teams at the mock, hoping for them to meet and basically make a decision and an announcement in the next few weeks.

Speaker #4: Okay thank you. one more question please. do you have any updates about the cancellation of the structural separation?

Ilanit Shoff: Okay. Thank you. One more question, please. Do you have any updates about the cancellation of the structural separation?

[Analyst 1]: Okay. Thank you. One more question, please. Do you have any updates about the cancellation of the structural separation?

Speaker #5: Yes so we saw the announcement from the MOC around the RFI in the past few months and we are having currently weekly meetings with the teams at the MOC.

Tomer Raved: Yes. We saw the announcement from the MOC around the RFI in the past few months. We are having currently weekly meetings with the teams at the MOC and hoping them to meet and to basically make a decision and announcement in the next few weeks. We currently in very active work stream with them. Let's wait for their announcements.

Speaker #1: We are currently in a very active workstream with them. So let's wait for their announcements. Okay, okay. Next question is from Sabina. Sabina, hi, good afternoon.

Speaker #5: And hoping them to meet and to basically make a decision and announcement in the next few weeks. we currently in very active work stream with them.

Speaker #5: So let's wait for their announcements.

Speaker #4: Okay. Okay thank you Tomer. Thank you very much for all of you.

Ilanit Shoff: Okay. Okay. Thank you, Tomer. Thank you very much to all of you.

[Analyst 1]: Okay. Okay. Thank you, Tomer. Thank you very much to all of you.

Speaker #3: Thank you Ilanit. We will try Andre again. So Andre hi.

Yohai Benita: Thank you, Ilanit. We will try Andre again. Andre, hi.

Andre Levy: Hello, can you hear me now?

Speaker #6: hello can you hear me now?

[Analyst 2]: Hello, can you hear me now?

Speaker #3: Yeah we can hear you.

Yohai Benita: Yeah, we can hear you.

Speaker #6: Okay. Good thank you. Hello thank you for the presentation. I had two questions please. you spoke about the impact of the war on mobile roaming revenues as kind of one of the you know areas where where maybe there was a bit of underperformance.

Andre Levy: Okay.

[Analyst 2]: Okay.

Yohai Benita: Hi, Andre.

Andre Levy: Good. Thank you. Hello. Thank you for the presentation. I had 2 questions, please. You spoke about the impact of the war on mobile roaming revenues as kind of one of the, you know, areas where maybe there was a bit of underperformance or the area where there was a bit of underperformance. I wanted to understand whether this is the only area in the business where the situation has had an impact on the business and whether, you know, given the maybe less restrictive past couple of weeks are leading to a rebound in the revenues already in Q2, whether you kind of see therefore or not a risk from the situation to potentially your guidance for the full year, of course. That's question number 1.

[Analyst 2]: Good. Thank you. Hello. Thank you for the presentation. I had 2 questions, please. You spoke about the impact of the war on mobile roaming revenues as kind of one of the, you know, areas where maybe there was a bit of underperformance or the area where there was a bit of underperformance. I wanted to understand whether this is the only area in the business where the situation has had an impact on the business and whether, you know, given the maybe less restrictive past couple of weeks are leading to a rebound in the revenues already in Q2, whether you kind of see therefore or not a risk from the situation to potentially your guidance for the full year, of course. That's question number 1.

Speaker #6: Or the area where there was a bit of underperformance. And I wanted to understand whether this is the only area in the business where the situation has had an impact on the business and whether you know given the the maybe less restrictive past couple of weeks are leading to a rebound in in the revenues already in the second quarter.

Speaker #6: Whether you kind of see therefore or not a risk from the situation to potentially your guidance. for the full year of course that's question number one.

Speaker #6: And question number two if I may you mentioned in your presentation the potential from subsea cables in the Mediterranean. And I wanted to understand whether there is a chance to revisit this kind of similar cable opportunity across the Middle East as was discussed in the past.

Andre Levy: Question number two, if I may. You mentioned in your presentation the potential from subsea cables in the Mediterranean, and I wanted to understand whether there is a chance to revisit this kind of similar cable opportunity across the Middle East, as was discussed in the past, and whether there is any update on kind of the data center and other opportunities, which were also discussed with big tech in Israel. Thank you.

[Analyst 2]: Question number two, if I may. You mentioned in your presentation the potential from subsea cables in the Mediterranean, and I wanted to understand whether there is a chance to revisit this kind of similar cable opportunity across the Middle East, as was discussed in the past, and whether there is any update on kind of the data center and other opportunities, which were also discussed with big tech in Israel. Thank you.

Speaker #6: and also whether there is any update on kind of the data center and other opportunities which were also discussed with Big Tech in in Israel.

Speaker #6: Thank you.

Tomer Raved: First I wanna be clear because it's important question. The group financials are not impacted by the war. There's, you know, positive and negative, and you're right, there is roaming impact on one hand, which is slightly negative. Without that, Pelephone was overperforming. Net, given the other positive impacts on the Bezeq fixed line and other companies in the group, the net impact of the war is nothing. Okay. It doesn't change our guidance for the rest of the year. Hopefully, the war doesn't continue or resumes. There are obviously gonna be impact on the roaming also in Q2, given the gradual, you know, resumption of the flights. The impact, we're not expecting any impact on the group results and on our guidance for the year. That's on the roaming question. On subsea cable, good question.

Speaker #5: so first I I wanna be clear 'cause it's important question. The group financials are not impacted by the war. There's you know positive and negative and you're right there is roaming impact on one hand which is slightly negative without that Telephone was overperforming.

Speaker #5: But net given the other positive impact on the on Bezek fixed line and other companies in the group the net impact of the war is nothing.

Speaker #5: Okay? With it, it doesn't change our guidance for the rest of the year. Hopefully, the war doesn't continue or resume. There are obviously going to be impacts on the roaming also in Q2.

Speaker #5: Given the gradual you know resumption of the flight. But the impact we're not expecting any impact on the group results. And oil guidance for the year.

Speaker #5: That's on the roaming question. on subsea cable good question. When we talk about connecting Europe to Israel to the Mediterranean. the core strategy is connecting Europe to Asia.

Tomer Raved: When we talk about connecting Europe to Israel to the Mediterranean, the core strategy is connecting Europe to Asia. We already have the terrestrial part in place. Bezeq fixed line has a very robust fiber network to allow for multiple cables to go from the Mediterranean to the Jordanian border and from there to Saudi, the Emirates, UAE and India. We already have active lines connecting the continents, basically Europe to UAE through these lines, but currently it's relatively on small scale. We are significantly bolstering the investment in that sector, and the ROI is gonna be very significant and pretty fast. The strategy is not connecting just to the Mediterranean. It's bypassing the Red Sea through Israel to Asia and the Gulf countries. I hope that answered the question.

Speaker #5: We already have the terrestrial part in place. Bezek fixed line had a very robust fiber network to allow for multiple cables to go from the Mediterranean to the Jordanian border and from there to Saudi Emirate the Emirates UAE and India.

Speaker #5: We already have active lines connecting the continents. Basically Europe to UAE through these lines. But currently it's relatively on small scale. we are significantly bolstering the investment in that sector and the ROI gonna be very significant and pretty fast.

Speaker #5: so the strategy is not connecting just to the Mediterranean. It's to bypassing the Red Sea through Israel to Asia and the Gulf countries. I hope that answers the question.

Speaker #3: Thank you Alex.

Yohai Benita: Thank you, Andre Levy.

Yohai Benita: Thank you, Alex.

Speaker #5: Andre Andre?

Tomer Raved: Andre.

Yohai Benita: Andre, sorry. Next question is from Sabina. Hi, Sabina.

Speaker #3: Andre sorry. next question is from Sabina. Hi Sabina.

Speaker #1: The competitive dynamics in the segment. I saw advertisements recently from your competitors with quite aggressive pricing, and I was wondering if. How does it impact your operations in both the fixed line and TV segments?

Speaker #4: Hi good afternoon. I have a question regarding the competitive dynamics in the fixed segment. I I I saw recently advertisements from your competitors with quite aggressive pricing and I was wondering if how does it impact your operation?

[Analyst]: Hi, good afternoon. I have a question regarding the competitive dynamics in the fixed segment. I saw recently advertisement from your competitors with a quite aggressive pricing, and I was wondering if how does it impact your operation, both in the fixed line and the TV segment? I also want to just trying to understand, I think that Yes had a very impressive quarter despite the aggressive competition in this segment, with the addition of 14,000 fiber customers. I was wondering where are they coming from? Are they coming from the fixed line segment or they're coming from the competitors? Also just if you can tell us whether the Yes and Partner deal is impacting the results for the first quarter already. Do we see the impact? Thank you.

[Analyst 3]: Hi, good afternoon. I have a question regarding the competitive dynamics in the fixed segment. I saw recently advertisement from your competitors with a quite aggressive pricing, and I was wondering if how does it impact your operation, both in the fixed line and the TV segment? I also want to just trying to understand, I think that Yes had a very impressive quarter despite the aggressive competition in this segment, with the addition of 14,000 fiber customers. I was wondering where are they coming from? Are they coming from the fixed line segment or they're coming from the competitors? Also just if you can tell us whether the Yes and Partner deal is impacting the results for the first quarter already. Do we see the impact? Thank you.

Speaker #4: Both in the fixed line and the TV segment. And I also want to just—just trying to understand, I think that yes had a very impressive quarter.

Speaker #1: I'm also trying to understand. I think, yes, had a very impressive quarter despite the aggressive competition in the segment, with the addition of 14,000 fiber customers, and I was wondering where they are coming from.

Speaker #4: Despite the aggressive competition in the segment, with the addition of 14,000 fiber customers, I was wondering, where are they coming from? Are they coming from the fixed line segment, or are they coming from the competitors?

Speaker #1: Are they coming from your fixed segment, or are they coming from competitors? Also, if you could tell us whether the partner. Deal is impacting the results for the first quarter already.

Speaker #4: And also just if you can tell us whether the yes and partner deal is impacting the results for the first quarter already. Do we see the impact?

Speaker #1: Do we see the impact? Thank you.

Speaker #2: A word on competition in general. We are not going to comment on pricing, and you know this sector extremely well. Both the fixed line and TV markets in Israel are extremely competitive.

Speaker #4: Thank you.

Speaker #5: One word on the competition in general—'cause we're not gonna comment on pricing. And you know the sector extremely well. Both the fixed line, solar, and TV market in Israel are extremely competitive.

Tomer Raved: One word on the competition in general, because we're not gonna comment on pricing, and you know the sector extremely well. Both the fixed line cellular and TV market in Israel are extremely competitive, one of the most competitive segments in the world. However, we have seen in the past 3 year rational market. I'm not commenting on advertising, the trends continue to be the same across cellular and fixed line with the migration from copper to fiber and then continued increase in ARPU. The bottom line to your question, it does not impact our results or our strategy across the board, across the group, across the different verticals and subsectors. I'll let Ilan discuss the Yes question.

Speaker #2: One of the most competitive segments in the world. However, we have seen rational marketing and advertising over the past year, but the trends remain the same across fixed line, with the migration from copper to fiber, continued growth in ARPU, and as for the bottom line of your question, it does not impact our results or our strategy across the board, across the group, and across the different verticals and subsectors discussed.

Speaker #5: One of the most competitive segments in the world. However, we have seen in the past three years a rational market. I'm not commenting on advertising, but the trends continue to be the same.

Speaker #5: Across solar and fixed line. With the migration from copper to fiber and then continued increase in ARPU. And the bottom line to your question it does not impact our results or our strategy.

Speaker #2: Yes, hi, Sabina. Us, where are they coming from? So, we have 565,000 customers, and, yes, is a very popular TV brand. Most of the clients are, of course, coming from the market, and our own TV customers want a bundle, so we are offering it as a premium brand plus fiber.

Speaker #5: across the board across the group across the different verticals and subsectors. I'll let Ilan discuss the yes question.

Speaker #3: Yes hi Sabina. you asked where are they coming from. So we have five hundred sixty-five thousand customers and yes is a very is a very popular TV brand.

Ilan Sigal: Yes. Hi, Sabina. You asked where are they coming from? We have 565,000 customers, and Yes is a very popular TV brand. The most of the clients, the customer coming for, of course, from the market. Also our customers that have TV want to have a bundle, so we are offering it, and we offering it as a premium brand, yes+, plus fiber. Our customers, I am glad that they are reaching out and taking our packages, and they love it. The best TV with the best internet. The market is want to have our packages. The second you asked about Partner, we started this partnership around October.

Speaker #3: And so the most of the of the of the c+clients the customer coming for of course from the market. And also our customers that have TV want to have a bundle so we are offering it.

Speaker #2: Our customers are glad they are reaching out and taking our packages, and they love it. The best TV with the best internet, so the market is.

Speaker #3: And we are offering it as a premium brand. A yes plus plus plus fiber. And our customers I'm glad that they are reaching out and taking our our packages.

Speaker #3: And they they love it. The best TV with the best internet. So the market is wants to have our our packages. The second you asked about partner.

Speaker #2: Wanting our packages. Regarding the second part of your question about partner, we started this partnership around October, and of course, this quarter, the first quarter, is also seeing that collaboration, the results reflect that.

Speaker #3: We started this partnership around October and of course this quarter the first quarter is also with with collaboration with partner. The the results are including that.

Ilan Sigal: Of course, this quarter, Q1 is also with collaboration with Partner. The results are including that.

Speaker #2: By the way, the result of the triple bundle is that you see the group's retail subscribers growing every quarter for more than a year now.

Speaker #5: And by the way, the result of the triple bundle that Yes sells—you see the retail subs of the group growing every quarter for the past more than a year now.

Tomer Raved: By the way, the result of the triple bundle that Yes sell, you see the retail subs of the group growing every quarter for the past more than a year now. Every quarter, you see consistent growth in retail broadband subs in the group, thanks to the bundling offering of Yes.

Speaker #2: Every quarter you see consistent growth in retail broadband subscribers in the group thanks to the bundling offering of. Okay, thank you. Maybe another one regarding Besik International, although it's a smaller operation within the group, but I was also positively surprised.

Speaker #5: Every quarter, you see consistent growth in retail broadband subs in the group, thanks to the bundling offering of Yes.

Speaker #4: Okay, thank you. And maybe another one regarding Bezeq International. Although it’s a smaller operation among the group, I was also positively surprised during the quarter with the performance of the business segment revenue.

[Analyst]: Okay. Thank you. Maybe another one regarding Bezeq International, although it's a smaller operation among the group, but I was also positively surprised during the quarter with the performance of the business segment revenue. I was wondering if it's a beginning of a trend or it's just something one time for the quarter.

[Analyst 3]: Okay. Thank you. Maybe another one regarding Bezeq International, although it's a smaller operation among the group, but I was also positively surprised during the quarter with the performance of the business segment revenue. I was wondering if it's a beginning of a trend or it's just something one time for the quarter.

Speaker #2: Revenue, and I wonder if. Trend, or just something. One time for the quarter. It's not one time, international has successfully been going through a transformation.

Speaker #4: And I was wondering if it's a beginning of a trend or it's just it's just something for something one one time for the quarter.

Speaker #5: It's not one time. Bezeq International has successfully been going through transformation. It's relatively small in the group, but in the past two, three years, and with new management, I'm focusing also on the new world of cloud and the infrastructure they have in place.

Tomer Raved: It's not one time. Bezeq International has successfully have been going through a transformation. It's relatively small in the group, but in the past 2, 3 years, and with new management, are focusing also on the new world of cloud and the infrastructure they have in place. This is not one-off. You will see the transition continue with the focus on growth, cloud, and the data center business. Definitely something to look out for, relatively in small scale, but in the right direction.

Speaker #2: It's relatively small for the group, but in the past two years and with new management, I am also focusing on the new world of cloud and the infrastructure they have in place.

Speaker #2: This is not a one-off, you will see the transition continue with a focus on growth in cloud and the data center business, so it's definitely something to watch, relatively small in scale but moving in the right direction.

Speaker #5: This is not one-off. You will see the transition continue, with the focus on growth and cloud and the data center business, so definitely something to look out for—relatively in small scale.

Speaker #2: Thank you very much, thank you, thank you. Andre. You are unmuted now, we can hear you. Good, sorry, there was an issue with unmuting, I wanted to follow up and thank you for the previous answer.

Speaker #5: but in the right direction.

Speaker #4: Right. Thank you very much. Thank you.

[Analyst]: Right. Thank you very much. Thank you.

[Analyst 3]: Right. Thank you very much. Thank you.

Speaker #3: Thank you Sabina.

Ilan Sigal: Thank you, Sabina.

Speaker #2: Thank you Sabina. a follow-up question from Andre.

Yohai Benita: Thank you, Sabina. A follow-up question from Andre.

Speaker #6: Yes. Am I unmuted now?

Andre Levy: Yes. Am I unmuted now?

[Analyst 2]: Yes. Am I unmuted now?

Speaker #3: We can hear you.

Yohai Benita: We can hear you.

Speaker #6: Okay, good. Sorry, there's an issue with unmuting. I wanted to follow up, please. And thank you, Tomer, for the previous answers. I wanted to understand where the upside from the situation is manifesting in the group.

Speaker #2: I wanted to understand where the upside from the situation is manifesting in the group, is it primarily the fixed line business? If you could perhaps talk about the overall net impact.

Andre Levy: Okay, good. Sorry. There's an issue with unmuting. I wanted to follow up, please, and thank you, Tomer, for the previous answers. I wanted to understand where the upside from the situation is manifesting in the group. Is it primarily the fixed line business? If you can maybe, you know, talk about the overall neutral impact.

[Analyst 2]: Okay, good. Sorry. There's an issue with unmuting. I wanted to follow up, please, and thank you, Tomer, for the previous answers. I wanted to understand where the upside from the situation is manifesting in the group. Is it primarily the fixed line business? If you can maybe, you know, talk about the overall neutral impact.

Speaker #2: So yes, where are the positives? And following up on the second answer regarding the submarine cable question, should we think about it in a way where once you roll out the Mediterranean subsea cable and unlock the whole chain of those links, that is when it clicks into place and you are able to become the intermediary for Europe-Asia traffic?

Speaker #6: Is it primarily the fixed line business? If you can, maybe you know, talk about the overall neutral impact. So, yeah, where are the positives?

Tomer Raved: Okay.

Andre Levy: Yeah, where are the, where are the positives? Then, following up on the second answer to the, you know, subsea cable question, do we or should we think about it in a way where once you roll out the kind of Mediterranean subsea cable and you unlock the kind of whole chain of those links, that's when it kind of clicks into place and you're able to become the kind of intermediary for the Europe to Asia traffic? Is that kind of the missing piece to like a larger revenue stream or how does that work exactly?

[Analyst 2]: Yeah, where are the, where are the positives? Then, following up on the second answer to the, you know, subsea cable question, do we or should we think about it in a way where once you roll out the kind of Mediterranean subsea cable and you unlock the kind of whole chain of those links, that's when it kind of clicks into place and you're able to become the kind of intermediary for the Europe to Asia traffic? Is that kind of the missing piece to like a larger revenue stream or how does that work exactly?

Speaker #6: And then following up on the on the second answer to to the you know subsea cable question. Do we or should we think about it in a way where once you roll out the kind of Mediterranean subsea cable and you unlock the kind of whole chain of those links?

Speaker #6: That's when it kind of clicks into place and you're able to become the kind of intermediary for the Europe to Asia traffic. is that kind of the missing piece to like a larger revenue stream?

Speaker #2: Is that the missing piece for a larger revenue stream, or how does that work exactly? So, I will first touch on the subsea cable, it relates to a general upside.

Speaker #6: Or or how does that work exactly?

Speaker #2: Regarding the subsea project, we have so far indicated one number, but it gives you a sense, we are going to invest 250 million shekels for 50% of the first cable we put in, and we intend to put two additional cables in place.

Speaker #5: So I first touched on the subsea cable because it kind of relates to general upside question. But on the subsea cable part I we meant we so far indicated one number but it gives you a sense.

Tomer Raved: I first touch on the subsea cable because it kind of relates to a general upside question. On the subsea cable part, we so far, I indicated 1 number, but it gives you a sense. We're going to invest ILS 250 million for 50% of the first cable we put in, and we have an intention to put 2 additional cables in place. You can make 2 to 3x your money just on pre-sale these cables. That's before maintenance fees and others. The IRR on these cables in a 2, 3-year period is very significant. That's kind of 1 answer. The current cables we have connecting Israel to Europe are relatively small scale. It's like 1 or 2 fiber pairs.

Speaker #5: We're gonna invest two hundred fifty million shekels for fifty percent of the first cable we put in. And we have an intention to put two additional cables in place.

Speaker #2: You can make 2 to 3x your money just by pre-selling these cables, that is before maintenance fees and other costs. So the IRR on these cables over a 2-year period is very significant.

Speaker #5: You can make two to three times your money just on pre-sale of these cables. That's before maintenance fees and others. So, the IRR on these cables in a two to three year period is very significant.

Speaker #2: So that is one answer. The current cables we have connecting Israel to Europe are relatively small, like 1 or 2 fiber pairs. We are talking about laying down multiple dozens of fibers, which is 10 to 20 to 30x the current capacity Israel has.

Speaker #5: So that’s kind of one answer. The current cables we have connecting Israel to Europe are relatively small scale. It’s like one or two fiber pairs.

Speaker #5: We're talking about laying down multiple dozens of fiber pairs which is ten to twenty to thirty X the current capacity Israel has. 'cause it's not about connecting Israel.

Tomer Raved: We're talking about laying down multiple dozens of fiber pairs, which is 10 to 20 to 30x the current capacity Israel has. Because it's not about connecting Israel, it's connecting Asia and Europe. The financial upside from that is significant. Generally speaking, the free cash flow of the group is gonna grow double digits on an annual basis and which allow us a lot of flexibility and upside to your point. Coming mostly from the successful execution of the ARPU, both on mobile and TV side on one hand and the significant upside you see from the subscriber base in fiber. We see people adopting higher speeds, which will further boost even north of the 150 ARPU we're currently targeting. Overall, it's pretty clear picture.

Speaker #2: It is not just about connecting Israel, it is about connecting Asia and Europe, so the financial upside from that is significant. Generally speaking, the group's free cash is going to grow by double digits on an annual basis, which allows us a lot of flexibility and upside, as you mentioned.

Speaker #5: It's connecting Asia and Europe, so the financial upside from that is significant. Generally speaking, the free capital of the group is going to grow double-digit on an annual basis.

Speaker #2: This comes mostly from successful execution on both the mobile and TV sides on one hand, and the significant upside we see from the fiber subscriber base on the other, as we see people adopting higher speeds, which will further boost us even north of the 150 we are currently targeting.

Speaker #5: And which allow us a lot of flexibility and upside to your point. And coming mostly from the successful execution of the ARPUs both on mobile and TV side on one hand and the significant upside you see from the subscriber base in fiber.

Speaker #5: we see people adopting higher speeds which will further boost even north of the one fifty ARPU we currently targeting. So overall it's pretty clear picture with a double digit growth in free cash flow in bottom line and I think people understand that we have a lot of flexibility also to work explore potential M&A and consolidation within the realm of this current market.

Speaker #2: So overall it's a pretty clear picture with double-digit growth in free cash flow and the bottom line. and I think people understand that we have a lot of flexibility also to unexplore potential M&A and consolidation within the realm of this current market.

Tomer Raved: We have double-digit growth in free cash flow, in bottom line, and I think people understand that we have a lot of flexibility also to explore potential M&A and consolidation within the realm of this current market.

Speaker #6: Thank you. And maybe on that one.

Andre Levy: Thank you. Maybe on that one, maybe on the final point.

[Analyst 2]: Thank you. Maybe on that one, maybe on the final point.

Speaker #2: Update on. Hot mobile situation, on the mobile side, we don't have an update. Another party is currently under exclusivity for the past 3 months, if they drop out, we will definitely go back on to the playing field.

Speaker #3: For the.

Speaker #6: Maybe on the.

Speaker #2: Regarding the.

Yohai Benita: Regarding the-

Speaker #6: Final point. Is is there an upside oh sorry. Is there an update on the kind of hot mobile situation?

Andre Levy: Is there an update on the kind of Hot Mobile situation?

[Analyst 2]: Is there an update on the kind of Hot Mobile situation?

Speaker #5: Hot mobile. Yeah. On the hot mobile side we don't have an update. There's another party currently under exclusivity from the past three months. if they drop we will definitely go back to the playing field.

Tomer Raved: Hot Mobile. Yeah, on the Hot Mobile side, we don't have an update. There's another party currently under exclusivity for the past 3 months. If they drop, we will definitely go back to the playing field. I think we are generally happy to see the market starting consolidation, pretty consistent with what you are very familiar with in Europe. We start to see the small trend in Israel on that front, in mobile, also in fixed line, by the way. There was a small tuck-in by IBC last month. We hope to see the rationalization we already started seeing in the past 2, 3 years happening also in the mobile sector. We will definitely are looking to play a part in that consolidation.

Speaker #2: But I think we are generally happy to see the market starting consolidation, pretty consistent with what you are very familiar with in Europe. We are starting to see a small trend in Israel on that front, in mobile and also in fixed, by the way, there was a small token of IBC last month, so we hope to see the rationalization we already started seeing in the past 2 to 3 years happening also in the mobile sector, and we are definitely looking to play a part in that consolidation.

Speaker #5: But I think we are generally happy to see the market starting consolidation. Pretty consistent with what you're very familiar with in Europe. We start see the small trend in Israel on that front.

Speaker #5: And mobile also in fixed line by the way there were small tuck-in by IBC last month. So we hope to see the rationalization. We already started seeing in the past two three years happening also in the mobile sector.

Speaker #5: And we will definitely are looking to play a part in that consolidation.

Speaker #2: Thank you. Okay. Thank you, Andre. If there are no further questions in English, we will open the call for questions in Hebrew. Anyone who would like to ask a question is invited to raise their hand virtually.

Speaker #6: Thank you.

Andre Levy: Thank you.

[Analyst 2]: Thank you.

Speaker #2: Okay, thank you, Andre. If there are no further questions in English, we will open the call for questions in Hebrew. Michel, רוצה לשאול שאלה.

Yohai Benita: Okay. Thank you, Andre Levy. If there are no further questions, in English, we will open the call for questions in Hebrew. Okay. Thank you, everyone for taking the time to join us today. Should you have any follow-up questions, please feel free to contact our investor relations department. We look forward to speaking to you on the Q2 2026 earning call. Thank you.

Speaker #2: אה מוזמן להרים את היד באופן וירטואלי. Okay. אין לנו שאלות בעברית. אממ so thank you everyone for taking the time to join us today.

Speaker #2: Okay, we have no questions in Hebrew. So thank you everyone for taking the time to join us today. If you have any follow-up questions, please feel free to contact our investor relations department.

Speaker #2: should you have any follow-up question please feel free to contact our investors relations department. We look forward to speaking to you on the second quarter twenty twenty-six earning call.