Bezeq

The principal Bezeq Group segments are as follows:

    As of December 31, 2016
Bezeq Group Segments Service Estimated
Market
Share
Market
Position
Bezeq………………………… Fixed-Line Telephony (private sector) 55.0% 1 of 4
Fixed-Line Telephony (business sector)

 

73.0% 1 of 2  

 

Fixed-Line Broadband Internet Infrastructure Access 69.0% 1 of 2
Pelephone……………………. Cellular Telephony 22.7% 3 of 5
Bezeq International…………………. ISP 44.0% 1 of 4
ILD 21.0%
DBS………………………….. Pay Television 44.0% 2 of 2

*Estimated market share is as of September 30, 2016.

The Bezeq Group had approximately 2.12 million active fixed telephone lines in its fixed-line telephony business, 1.56 million fixed-line broadband Internet infrastructure access services subscribers (retail and wholesale), 2.40 million cellular telephony services subscribers and 614,000 pay television services subscribers as of December 31, 2016. For the year ended December 31, 2016, the Bezeq Group had revenues of NIS 10.08 billion (approximately $2.62 billion).

 

The Bezeq Group’s diversified telecommunications services are based on highly advanced nationwide infrastructures and are provided by the following segments of the Bezeq Group:

 

Domestic Fixed-Line Communications (Bezeq)

Bezeq is the incumbent and largest provider of fixed-line telephony and fixed-line broadband Internet infrastructure access services in Israel. Its products and services include basic telephony services on domestic telephone lines and associated services and fixed-line broadband Internet infrastructure access services through its nationally deployed, high quality infrastructure network. Bezeq also offers, among other services, transmission and data communication services, services to other communications operators and broadcasting services. Bezeq’s new high-speed next generation network, or NGN, is the most advanced fixed-line communications network in Israel. The NGN, which covers 100% of Israeli households, uses VDSL2 technology and enables Bezeq to provide bandwidth of up to 100 Mbps (download) speed, as well as innovative value-added services.

 

Bezeq Domestic Fixed-Line Communications As at and
for the
year ended
December 31,
2016
  (in millions,
except
percentages)
Revenues……………………………………………………………………………………………. NIS 4,383
Fixed-line telephony
Estimated market share(1)………………………………………………………………………………………………. 64%
Active lines…………………………………………………………………………………………………. 2.119
Churn rate…………………………………………………………………………………………………… 10.4%
Fixed-line broadband Internet infrastructure access
Estimated market share…………………………………………………………………………………………………. 69%
Subscribers…………………………………………………………………………………………. 1.558

 

(1)        As of December 31, 2016, Bezeq’s market share in the business and private sectors of the fixed-line telephony market is estimated to be 73% and 55%, respectively.

 

 

Cellular Telephony (Pelephone)

Pelephone is among the leading cellular telephony services providers in Israel. Pelephone provides cellular telephony services, sells handsets and other end-user equipment, and provides repair services for handsets sold by Pelephone.

 

Pelephone As at and
for the
year ended
December 31,
2016
(in millions,
except percentages)
Revenues……………………………………………………………………………………………. NIS 2,630
Estimated market share…………………………………………………………………………………………………. 22.7%
Active lines…………………………………………………………………………………………………. 2.40
Churn rate…………………………………………………………………………………………………… 23.7%

ISP, ILD, Data Services and ICT (Bezeq International)

Bezeq International is the leading provider of ISP services in Israel and one of Israel’s leading providers of ILD and international and domestic data transfer and network services. Bezeq International provides comprehensive communications solutions that include ISP and related value-added services, international and domestic telephony, PBX supply and support, ICT, cloud computing services, data communications and information security, website server hosting and related managed services. Bezeq International also owns the JONAH high-speed submarine optical fiber communications cable system connecting Israel and Europe, which provides increased bandwidth (capacity and speed) and has positioned Bezeq International as the sole ISP in Israel to own and operate an advanced international network.

The international telephony market in Israel has in recent years seen a decline in call volume, (incoming and outgoing), mainly due to the service bundles offered by the cellular companies that include international calls as well as the multiple free applications that enable calls via the web. In 2016 the international telephony market declined (in number of minutes) by 11%.

The Internet market recorded continued growth stagnation in 2016 together with an increase in the surfing speeds consumed. Generally, the increase in demand for high speed browsing requires Bezeq International to periodically increase its operating capacity via its Jonah submarine cable and the international capacity rights it acquires.

Bezeq International As at and
for the
year ended
December 31,
2016
(in millions,
except percentages)
Revenues……………………………………………………………………………………………. NIS 1,548
ISP
Estimated market share…………………………………………………………………………………………………. 44.0%
Churn rate…………………………………………………………………………………………………… 20.4%
ILD
Estimated market share…………………………………………………………………………………………………. 21.0%

Multi-Channel Pay Television (DBS)

DBS offers nationwide coverage through its DTH technology and innovative and advanced technologies, including PVR, VOD and HD television. It is the only company in Israel licensed to provide multi-channel pay television broadcasts via satellite and is one of two companies in Israel licensed to provide multi-channel television services. DBS focuses on creating clear differentiation from its main competitor, HOT, with respect to brand, content and service quality. In addition, DBS has a strong track record of innovative technology development and is a leading provider of value-added services, including hybrid IP and DTH based set-top boxes (including PVR and VOD).

 

DBS As at and
for the
year ended
December 31,
2016
(in millions,
except
percentages)
Revenues…………………………………………………………………………………………. NIS 1,745
Estimated market share………………………………………………………………………………………………. 40.0%
Subscribers (in thousands) ……………………………………………………………………………………….. 614
Churn rate………………………………………………………………………………………………… 15.9%