Investment house Nessuah Zannex opens its quarterly Israeli telecom sector report with a note on the increased Q3 cumulative net loss of Bezeq, Partner Communications (Nasdaq, TASE:PTNR, LSE:PCCD) and Matav Cable Systems (Nasdaq:MATV), which came to NIS 143 million, compared with a negligible loss of NIS 0.5 million in Q2 2001.
The bank does predict their joint loss will drop 42% from the third to the fourth quarter, while the companies' joint revenues will remain the same. The investment bank predicts Bezeq's net profit will come to NIS 30.7 million, Partner's net loss will reach NIS 53.3 million, and Matav's net loss will total NIS 37.7 million.
Nessuah communication sector analyst, Haim Israel, says chances of privatizing Bezeq are slim to none. Its recent share price leap, and progress in raising NIS 900 million for employees' early retirement will create the illusion of a revived privatization process, he says.
The cancellation of the Cellcom and Ofek LMDS tenders, along with the cable companies' technological and financial immaturity, lead the bank to believe limited competition in the telephony sector will not be launched before 2005. The fact that the Communications Ministry missed the bus, combined with irrational competition conditions, will hurt the sector.
The bank closes its quarterly telecom market review with a Neutral recommendation for the sector, and selective screening. Though the gap was eliminated since the previous quarter, Israeli telecom companies are still overpriced compared with their international counterparts.