B Communications Ltd. (NASDAQ:BCOM)(TASE:BCOM) today reported its financial results for the first quarter ended March 31, 2010.
Q1 Was A Transitional Quarter For B Communications
The first quarter of 2010 was a transitional period for B Communications as it completed its final preparations for the acquisition of the controlling interest (approximately 30.43%) in Bezeq - The Israel Telecommunication Corp., Ltd. (“Bezeq”) in consideration for approximately NIS 6.5 billion (approximately US $1.75 billion). The transaction was completed on April 14, 2010, subsequent to the end of the quarter.
As a prerequisite for regulatory approval of the Bezeq transaction, the Company sold its legacy communications business as of January 1, 2010 to a wholly-owned subsidiary of Ampal-American Israel Corporation for NIS 1.2 billion (US $323 million), generating a capital gain of NIS 60 million (US $16.2 million). This gain is included in B Communications’s first quarter results.
The Company’s operating results for the first quarter reflect neither the operations of its legacy communications business, which were divested as of the first day of the quarter, nor the results of Bezeq, whose results will not be consolidated into the Company’s financial statements until the second quarter of 2010.
In the first quarter
of 2010, Bezeq reported revenues of approximately NIS 2.9 billion (US $785 million), operating profit of NIS 874 million (US $235 million) and net profit of NIS 642 million (US $173 million).
Adoption of International Financial Reporting Standards (IFRS)
In contemplation of its acquisition of the controlling interest in Bezeq, on January 1, 2010, the Company adopted the IFRS as issued by the International Accounting Standards Board, which are the financial reporting standards utilized by Bezeq, to replace its previous reporting standard, the Generally Accepting Accounting Principles used in the United States (US GAAP). The transition date to IFRS under First Time Adoption of International Financial Reporting Standards is January 1, 2008, and the Company will provide retrospective comparative financial data to reflect its adoption of IFRS. The Company’s Annual Report on Form 20-F for the year ended December 31, 2009, which will be filed during June 2010, will include consolidated financial statements for the years ended December 31, 2008 and 2009 prepared in accordance with the IFRS.
Comments of Management
Mr. Eli Holtzman, CEO of B Communications, commented, “We are very excited to have closed the Bezeq transaction, the realization of our goal to become Israel’s leading telecom player. Our current focus is to ‘digest’ this transaction and to execute our well-calculated plan for repayment of the associated debt incurred. Over the longer term, our Group as a whole will look to leverage our accumulated know-how and experience in the area of telecommunications and acquisitions and search for accretive global investments which match our growth strategy.