Investment bank Nessuah Zannex is pessimistic about the privatization of state-owned phone company Bezeq, and doesn't expect Bezeq subsidiaries's results to improve soon.

In the fourth quarter last year Bezeq fell into the red with a NIS 42 million loss, analyst Haim Israel noted. Revenue growth will be more moderate in 2002, and come to 1% compared with 2001, primarily due to stable revenue from fixed-line telephony, he estimates.

The analyst expects cellular provider Pele-Phone Communications to post an operating balance at year-end Bezeq International to reach a balance in the first quarter this year.

Satellite TV firm Yes is unlikely to improve its results soon, he said, and expects it will be cash flow positive only in 2005.

The analyst is pessimistic about the chances for Bezeq's privatization, believing changes in the timetable are likely. Even if serious entities bid for control in Bezeq, Israel doesn't expect the privatization process will be completed before the first quarter of 2003.

The analyst estimates cable companies, Matav Cable Systems (Nasdaq:MATV), Tevel and Golden Channels will recruit most broadband Internet subscribers in 2002.

According to Israel, at the end of 2002 there will be 110,000 broadband Internet subscribers, of which 70,000 will be Bezeq asymmetric digital subscriber line service subscribers, and 40,000 will use the cable companies services.

The analyst expects a turnaround in 2003, when cable firms are expected to reach 120,000 subscribers, while ADSL subscribers will come to 105,000.

Nessuah Zannex reiterated a Neutral rating for Bezeq.