Bezeq The Israel Telecommunication Corp. Ltd (BEZQ) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Bezeq Third Quarter 2020 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded and broadcasted over the web. At this time, I would like to turn the call over to Mr. Naftali Sternlicht, Investor Relations Manager for Bezeq. Mr. Sternlicht, please go ahead.

Thank you, operator. Welcome, everyone, and thank you for joining us on the call today. With us from Bezeq Group's senior management team, we have Mr. Gil Sharon, Bezeq's Chairman; Mr. Dudu Mizrahi, Bezeq's Fixed-Line CEO; Mr. Ran Guron, CEO of Pelephone, Bezeq International, yes; Mr. Yali Rothenberg, Bezeq Group's outgoing Chief Financial Officer; and Mr. Tomer Shani, CFO of Pelephone, Bezeq International, yes. Before we start, I would like to draw your attention to the safe harbor statement on Slide #2, which also applies to any statement made during today's call. The speaker's comments will generally follow the slide presentation, which is available under the Slides tab on the webcast link and may also be downloaded from Bezeq's IR website. You can go through the presentation by clicking on the arrows on the left or right-hand side. Let me now turn the call over to our Chairman, Mr. Gil Sharon, for prepared remarks. Yali will then continue the presentation on group financial highlights, followed by Dudu discussing basic fixed-line results, Ran will pick up with results of our subsidiaries, after which management will be available to answer questions.

Thank you, Naftali. Hi, everyone. Let's start on Slide 3. Overall, at the end of the third quarter 2020, the total impact of COVID-19 pandemic on the financial condition of the group companies was immaterial. In spite of this, the Group's companies continued to work hard to provide services to our business and private customers, while complying with government's guidelines and managing risks arising from the pandemic. Let me remind you that Bezeq and the telecom companies as a whole are deemed as an essential sector by the government and that demand for some of the services provided by the company has even grown as a result of the regulatory measures imposed due to the pandemic. As people spend more time indoors, we continue to see an increase in retail Internet lines and traffic and increase in fixed-line telephony usage. In terms of performance of subsidiary companies, mobile roaming revenues were negatively impacted by the pandemic as people traveled less. Offsetting that was growth in telephone postpaid subscribers, positive free cash flow in yes and increase in yes IP subscribers. In the business sectors, we're seeing growth in demand for remote connection and virtual conference. While we proactively capture these market opportunities, we also continue to push forward with streamlining initiatives to cut costs. During the quarter, we launched our 5G network and recently announced the launch of fiber. Turning to the issues at Bezeq International on Slides 4 through 6. As part of the preparation of Bezeq International's financial statements for Q3 2020, discrepancies in net asset balances beginning in 2002 were discovered internally by Bezeq International's CFO. The cumulative effect of these discrepancies resulted in an impairment in 2019 reports. The financial data in December -- in the December 31, 2019 and September 30, 2019 reports were restated in order to reflect the effect of the above amendment. Since identifying the error, Bezeq International acted with the assistance of external third-party consultants and experts to locate and correct the errors to prepare revised financial statements. We take these failures discovered extremely seriously. The Board has appointed an independent external auditor firm, Fahn Kanne, led by CPA, Mickey Blumenthal, to investigate all the incidents and recommend the necessary course of action to correct failures and prevent them from happening in the future. In addition to the accounting issues, the financial results were impacted by impairment of assets in Bezeq International due to its adjustments for paying customers who have not used Bezeq International ISP services for an extended period. Details of the restatement and impairment are shown in charts in Slides 5 and 6. Turning to Slide 7 and 8. Despite the remaining uncertainty in the economy as a result of the pandemic, we resumed publishing our outlook for 2020. After a review of the Group's performance, we decided to update our guidance for the annual adjusted net income from ILS 950 million to ILS 1.05 billion, and annual adjusted EBITDA from ILS 3.5 billion to ILS 3.6 billion, while we expect CapEx to remain at ILS 1.5 billion for the year. I would also like to point out the strength of the Group as presented later on Slides 10 to 12, which show that revenues and adjusted EBITDA remained at a level similar to the corresponding period, considering the drop in roaming revenues. We see that as a strong position going forward in the deployment of our ultrafast networks, both Bezeq fiber and Pelephone 5G. Before I turn the call to Yali to talk about the financial results, I would like to thank Yali for his commitment and dedication to Bezeq over the last 3 years. Under his leadership, Bezeq has improved its financial profile and became a stronger and better company. Yali, on behalf of all the colleagues around the group, I wish you the best on your future job. Thank you, Yali.

Thank you, Gil. It's been an absolute privilege for me to work with you and others at Bezeq. I am proud of the work that we've done together in laying a solid foundation for what is sure to be an exciting new chapter for the company with new and leading telecommunications offerings. That being said, this will be my last call with the company. As I turn to my new role as the Accountant General and Treasurer of the state of Israel. I look forward to watching Bezeq continue to grow. Let's turn to Slide 10. The Group's strong financial results in the third quarter continue to validate the strength of the Group's operations, the diversification of the sources of revenues and the ability to streamline expenses during the quarter. Group-wide revenues totaled ILS 2.18 billion, down 3.1% from the prior year quarter. The decrease in revenues was due to a decrease in roaming revenues, partially offset by an increase in Bezeq's Fixed-Line revenues. On Slide 11, group-wide gross salary expenses were in line with the prior year quarter. Decrease in headcount due to the comprehensive streamlining plan was offset by an increase in Bezeq Online due to an increased activity. Meanwhile, group-wide operating expenses decreased from ILS 813 million a year ago to ILS 790 million in the third quarter of 2020, a decrease of 2.8%. The decrease in operating expenses was due to continued streamlining across business segments. Turning to Slide 12. Adjusted EBITDA in the third quarter of 2020 was ILS 914 million compared to ILS 960 million in the same quarter of 2019, a decrease of 4.8%. Group-wide adjusted net profit increased 39.6% to ILS 989 million (sic) [ ILS 289 million ] in the third quarter from ILS 207 million a year ago, primarily due to a decrease in financing expenses in basic fixed-line due to the early repayment of debt in the corresponding quarter. Moving to Slide 14. Free cash flow in the third quarter was ILS 285 million compared to ILS 358 million in the same quarter of 2019. The decrease in free cash flow was mainly due to a refund of betterment levy in the prior year quarter in connection with the sale of the Sakia complex. After adjusting for the impact from Sakia, free cash flow was in line year-over-year. Gross CapEx in the third quarter amounted to ILS 442 million compared to ILS 404 million in the same quarter a year ago. The increase was mainly due to a refund of the betterment levy in the prior year quarter in connection with the sale of Sakia, increased CapEx in the BE router and customer premises equipment as well as the 5G deployment. On Slide 15, we have broken down subscribers and ARPU by different business segments. Let me point out that subscribers in cellular and retail broadband segments moved up during the quarter and weaker broadband ARPU grew to ILS 100 compared to ILS 98 in the third quarter of 2019. Lastly, turning to Slide 16. We are adapting operations to evolving market conditions and continue to improve our debt profile. Of particular note, this last quarter is the year-on-year decrease of ILS 869 million in net debt as well as a decrease in net debt-to-EBITDA leverage ratio from 2.4 in the third quarter of 2019 to 2.2 in the third quarter this year. In addition, the outlook for our debt rating remains stable by the Israeli global rating agencies. Now Dudu will share with you updates on fixed-line operations.

Thanks, Yali. I'm pleased to share that we posted strong financial results in the third quarter and again recorded an increase in revenue. The increase in revenues was attributable to growth in the private and business broadband sector as well as cloud and digital services, which was partially offset by a moderate decrease in revenues on telephony services. At the same time, we continue to record an increase in the number of retail broadband subscriber as well, as you can see on Slide 18. In addition, we also grew total broadband line while continuing to accelerate the sales of related equipment. ARPU increased year-over-year as a reverse and complementary home product, including Bspot, Be Mesh and BE router and other value-added services continue to gain penetration into customer premises. On Slide 20, the government of Israel approved the nationwide deployment of our fiber optic in accordance with the final recommendation of the Inter-Ministerial Team. In the coming weeks, we will begin our aggressive deployment of fiber with hundreds of teams operating simultaneously throughout the country. By the end of 2021, we expect our fiber network to reach about 1 million households in Israel. Our entry into the field of fiber optics will have far-reaching effect on Bezeq and on the entire Israeli economy. And if we enable millions of customers throughout Israel to enjoy ultrafast broadband and make the state of Israel a world leader in telecommunication infrastructure. Turning to Slide 21, we continue to focus on the customer premises through a 3-part strategy, which consists of our BE router as the base home products that ensure broadband quality such as Bspot and Be Mesh and value-added services such as cyber protection, antivirus and network support. The number of customers with BE router increased from 272,000 in the third quarter of last year to 520,000 today. About 52% of our retail customers choose to connect with the BE router. Meanwhile, the number of customers with Bspot and Mesh increased by 140% over the same period. On Slide 22, our telephony offering saw a significant increase in traffic during the quarter, with outgoing minutes up 15% year-over-year, and incoming minutes up 24% year-over-year. As a result, average revenue per telephony line increased year-over-year. Turning to the next slide. In addition to broadband, we saw revenue growth in the transmission and data and cloud and digital services segment. Revenues from transmission and data segment was up 2% year-over-year due to an increase in revenues from transmission services for ISPs. Revenues for the cloud and digital segments was up 2.9% year-over-year due to an increase in revenues from virtual exchange and cloud services for businesses. Moving on to Slide 24. Revenues in the third quarter were ILS 1.04 billion compared to ILS 1.03 billion in the previous year quarter. The increase in revenues was due to an increase in most revenue item, which was partially offset by a moderate decrease in revenue from telephony services. Meanwhile, expenses was up slightly from last year, mainly to an increase in operating expenses, which was impacted by the increase in interconnect fees to cellular operators due to an increase in telephony traffic as well as terminal equipment fees. Turning to Slide 25 and 26. Adjusted EBITDA in the third quarter was ILS 663 million compared to ILS 657 million in the same quarter of 2019. Meanwhile, adjusted net profit increased by 75% year-over-year to ILS 296 million, mainly due to a higher financing expenses in the corresponding quarter resulting from early repayment of debt. Revenues and adjusted EBITDA in the 9-month period was slightly up compared to the prior year period. In summary, during the third quarter, broadband Internet revenues grew to -- due to an increase in subscriber and ARPU. In addition, we saw tremendous success in sales of BE router and WiFi enhancements. Going forward, I believe that the launch of the nationwide deployment of fiber as well as unified broadband Internet offerings, which we include the ISP portion, will drive continued growth in the private broadband Internet market. Now I'll turn the call to Ran to talk about Bezeq subsidiaries.

Thank you [indiscernible] and hello, everyone. And good luck, Yali, in your new position. We finished the quarter with good operational results despite the impact on mobile roaming revenues. The companies continue to show improvement in operating expenses with year-over-year reduction of ILS 59 million in expenses. In yes, we continue the positive trend of stabilizing profitability metrics and positive cash flow since the beginning of the year. At the end of the quarter, we reached 100,000 customers in IP that are approximately 20% of all subscribers of the company. At Pelephone, we had a significant and historic quarter, with awarding of the 5G frequencies. And we are the first to launch and operate the commercial network, along with completing the deployment of the site and according with the outline of the Ministry of Communications. At Bezeq International, we are working through the accounting situation along with independent outside experts. Clearly, the subsidiary companies are showing significant results. Moving to Slide 28. I'd like to remind everyone that this started in early 2019 when we took on challenge and merged 3 companies, Pelephone, Bezeq International and yes, to realize synergy and operational efficiencies. We are currently going through Phase A, which runs from 2019 to 2021; which Phase B of streamlining starting in 2022. Going forward, our goal, as stated in Slide -- on Slide 30, are to improve efficiencies and operational performance through the unified management team, continue streamlining in corporate headquarters and offer joint bundled services packages. Turning to Slide 32 through 35. Let's briefly look at some key financial metrics for the subsidiary companies. We continue to lower salary expenses during the quarter. Since the first quarter of 2018 salary expenses decreased by 21%. Revenue went down year-over-year due to the decrease in roaming revenue as a result of the COVID pandemic. Expenses declined across the board due to streamlining initiatives. Adjusted EBITDA and adjusted net profit decreased year-over-year due to the pandemic impact on roaming revenues, which were partially offset by measures to adjust expenses as well as increase in demand for other products of the company. Moving to Slide 35, we have identified areas for additional service opportunity in real estate, set-top boxes, switching on centralized CRM system and joint procurement. Looking forward to the future, I'm pleased to share that all 3 subsidiary companies are marching to offer the next-generation technologies in each of the 3 business units, 5G and mobile, IP in yes and Bezeq International to use Bezeq and new fiber optics network. Moving to Slide 38 to 40. For Pelephone, revenue and profitability decreased in the third quarter, in 9-month period primarily due to the reduction in mobile roaming revenues. We continued to grow our postpaid subscriber base during the quarter and during the first 9 months of the year. Upon winning the government 5G tender auction, we are excited to launch 5G services and record speed for our customers and wide coverage across diverse selection of handsets and plans. I would like to emphasize that Pelephone is the only company that won frequencies for its exclusive use, which will give a competitive advantage to Pelephone network. Moving to Slide 41 to 43. For yes, revenues show moderate decline in the third quarter and 9-month period. Adjusted EBITDA grew in the third quarter compared to previous quarter. Subscriber base grew by over 1,000 since the beginning of the year due to increase in demand for yes+ and STING TV. Our IP migration is bringing enhanced customer experience as well as cost savings. Customers had access to most robust content library in Israel from both Android and Apple TV. We recently launched yes+LIVE, a groundbreaking technology for watching broadcast truly live without any delay. So far, 20% of our customers have at least one IP streamer, and we are saving money in doing so as we replace expensive set-top boxes for cheaper streamers. Moving to Slide 44 to 46. Let me point that Bezeq International comparative numbers, including spectrum for the previous 6 quarters, third quarter 2020 revenues and adjusted EBITDA show moderate decline year-over-year. We are a leader in business solution and the pandemic led further increase in corporate demand for larger bandwidth on our Internet infrastructure. This concludes our prepared remarks. Operator, let's begin the Q&A session.

[Operator Instructions] Your first question is from Tavy Rosner of Barclays.

This is Chris Reimer on for Tavy. Just touching on the guidance for year-end adjusted EBITDA. Does that imply a lower 4Q considering the level you're at now?

Yali, maybe you can answer?

Yes. I'm waiting for the queue because I can't see you guys. In the first half of the year, we've had a lot of expenses that we've saved due to the COVID-19, which we do not anticipate -- we do not anticipate on the expense side in the fourth quarter, that's one thing. And the second thing is that we've had revenues coming in above our expectations from -- mainly from telephony now and broadband. And we think that this curve will somewhat straighten in the fourth quarter. That's why you can see that the difference between the, let's say, the first half and the second half of 2020 in the guidance.

Okay. And can you give some color around the potential change in wholesale fees?

This is for Dudu to take.

As you know, there's an annual formula which regulates the wholesale tariffs, mainly the consumption, the -- what we call the gigs of bandwidth that are transferred on our network. And that formalize basically taking the usage, the overall usage on the network and dividing the overall cost on the network with the overall consumption. And there's an annual update of this tariff due to a very high consumption over the last year. The effect on the tariff is substantial. So while consumption is increasing significantly, tariff dropped significantly. So we expect the result to be significantly lower price for consumption, mainly on consumption over the next year. There's another element of payment on -- based on subscriber connected, which the Ministry wants to change the methodology in which they calculate the price. And that will also have a negative effect on the overall prices. So overall, we expect significantly lower prices for wholesale next year. Having said that, the overall revenues effect could be much lower, and that's basically depends on the amount of bandwidth -- on the usage next year. So if usage will grow dramatically, then the overall effect on revenues will be -- could be very low, even positive. So we're only talking about the price, which, basically, drops down every year during the last few years since we have a wholesale regime in Israel. Even on 2020, we had a substantial decrease in tariff, but the overall revenues grew mainly because the consumption was -- grew much higher than what -- than the decrease in the tariff. So in order to really predict what happened to revenues, it really depends on the amount of traffic and amount of subscriber on the network over the next 12 months.

Okay. And just relating to the issues that have come up with Bezeq International. Is that something that could have occurred in other divisions? Are you auditing those as well?

Yali?

So we look at this incident very severely. And we have taken many steps that even potentially it couldn't happen in other divisions. In this specific type of business within Bezeq International, there's an occurrence of a -- as a part of the business, as of deferred expenses. And some of these expenses, this is what we think now and also pending more investigation as we explicitly reported and said. So some of these expenses were not imputed in the right way into the P&L. So we are not aware, obviously, of anything else like this. And right now, we don't think that this thing could occur in any other places because of the unique business orientation with this unit within Bezeq International.

The next question is from Ondrej Cabejšek of UBS.

I had a short follow-up on the guidance question. So we know that you've had some benefits and also some opposite effects from COVID. Would you say that the 2020 guidance upgrade, was it primarily due to COVID? Or was it more of the underlying business performing better than you had expected? And basically, what I'm after is, does the 2020 guidance upgrade have any carryover into 2021, i.e., should there be a compounding effect from your better performance? Or would you think that's a one-off from COVID? That's my first question, please. And then I wanted to ask about the fiber monetization. So you now report that you've started a pilot in several cities. You're now expecting -- or you're giving an explicit target for 1 million of homes passed in fiber to the home by the end of 2021. We have seen more sort of parliamentary positive action this weekend. Do you have confidence that you can start monetizing fiber in 1Q '21 is my question?

Okay. So I'll take the first one, as suggested, will take the second question. The -- so there will be some effects of 2020 into 2021 because some of the fadeout of the -- we are in COVID and part of this is COVID -- mainly others suggested telephony, but part of this is not COVID. We think that the change in the retail ARPU within Bezeq and the amount of sales and growth in the retail is not COVID, although it's backed up by the current environment that everybody needs more -- better Internet and better service and so on. So the -- on the expense side, we won't see any -- we don't anticipate to see any things, unless it's going to be another some kind of closure and people will be left at home and then with some more savings on the expense side. On the revenue side, we will see some spill sets into 2021 of the COVID, and some of it is underlying mainly in the broadband business within Bezeq. [ At this time ], we also saw positive effects versus what we thought in the beginning on the other companies, mainly on yes. We saw that yes is a -- stand better than we thought, initially within the budget. This is also partly COVID and also part of the company, which is responding to the changes within the market and making better sales and so on. So this is why we thought about this and decided to change the outlook.

Regarding the fiber question. As you know, fiber optic investments are usually very long-term returns, but our approach to the fiber project is very, very aggressive approach. The targets we set for ourselves for reaching 40% of Israeli households within one year, I don't think there is a precedent to that anywhere else in the world. So in the same way, we're going to approach the economics of the project. And our expectation is to see very, very quick return on that project. Whether we succeeded our plans or not is yet to be seen. What I think we have -- we feel very confident in our ability to execute and to deliver, and we expect very, very fast return on those investments.

And if I may, one follow-up. Yali. You mentioned yes, so short questions. See that they're connected, but you've been sort of deregulated recently in terms of being able to bundle yes and being able to make some of the production exclusive. Do you foresee that as changing your overall TV strategy? And does that have any implications for where you would see the revenue trends rather bottom out?

I don't think we have calculated this yet. Maybe Gil has a strategy or do you want to take that one?

Maybe Ran because it's related to yes.

Okay, this is Ran. Thank you. Well, we are waiting for the improvement from the antitrust for the removal of this restriction that we had. So we would be able to bundle or mainly create a triple-play between all the subsidiaries. This is a long-term movement. I mean this wouldn't create an effect in short term. But basically, as we all know, if customers will be part of a triple-play offer, in the long term, you can see reduction in churn and strengthening of customer's loyalty. So -- and this will also eliminate the disadvantage that we have toward other players that are allowed for triple-play. And if I can mention the removal of these restrictions will be maybe useful for Bezeq's fixed-line as well in the future once the other constrictions that we have will be removed. So this is more of a strategic, long-term move for us.

And so would you say that it is short term more of an opportunity to be kind of more aggressive in terms of bundling prices? Or what would you sort of do with this deregulation if it happened short term strategically?

Well, this can help us somehow in the short term, but this is mainly a long-term, and we'll have to see over the news, so I'm not going to elaborate more than that.

The next question is from Jerry Dellis with Jefferies.

I've got 3 questions, please. Firstly, in relation to your fiber build targets of 1 million homes by the end of 2021. Given the geographical locations that you're intending to deploy in, is there a market share win back opportunity, either in Internet infrastructure or in the ISP market that's worth considering as that network is deployed? Second question is related to the mobile market. Obviously, quite a lot happening recently, the early deployment of 5G, the early integration of Cellcom and Golan and some [ new fare expert ] recently. What's the organic path towards creating more price discipline in the mobile market, please? And then my final question is related to the volume adjustment to the wholesale rates as previously discussed. What stage do you think you'll be in a position to quantify the impact that, that might have at the company level and the group level on 2021?

I'll take the first question regarding the fiber. Of course, there's a win back opportunity here because, as you know, our competitors are already deployed. Roughly, I would say, 25% of the country is deployed. And of course, part of our deployment is reaching areas and buildings that are already being deployed by our competitors. And of course, there's a win back opportunity here, both on the network side and, of course, on the ISP part. So there's -- I think there's a big opportunity for us here. Regarding your third question, basically, we have our assumption regarding -- where we -- there's -- the price is already, I would say, set. Still, we'll go under some kind of a hearing process, and it might be changed because of things. We have to say on that, on the way it was calculated, but the part that we don't know yet is, of course, the amount of traffic that will run through the network, and that eventually will determine the revenues, the revenue streams from wholesale. We have, of course, our own assumptions, but we are not disclosing those elements currently. So we have our assumption, of course. I can only say that, looking back, the price decline in 2019 was quite dramatic. Also, I think, if I recall correctly, it declined by 30%, but the overall revenues grew due to a sharp increase in usage. So the -- as I said earlier, the final result really depends on the amount of traffic on the network we'll see moving forward.

This is Ran. I'm going to take the mobile question. Well, I'm not going to address the prices directly. All I can say that we are kind of optimistic because we see mergers in the market. So Golan is part of Cellcom now, and this is a trend going worldwide and in this country as well. And at the same time, we see that we are starting to take some premium of customers going on our 5G network. So these are optimistic sign, but this remain a highly competitive market with many, many players. So we cannot say which way it will go, but there are some signs that we look closer into the signs as 2021 goes forward. So that's for mobile prices.

Could I just ask a follow-up, please, on the -- related to the fiber deployment? Could you just remind me, please, whether there is an established process for switching off the copper network as the fiber is deployed? And if so, what that might look like, please?

Meaning -- could you expand the question?

So as you deploy fiber to 1 million premises by the end of 2021 and then go beyond that, is there a formalized process for the milestones after which you're able to actually switch off copper and the notice period that you might have to extend towards wholesale customers before that can happen?

No, no, no currently. Currently, it's an overlay. The -- both network will exist at the same time. We still provide a telephony services through the old switching and copper network and that will be the case for the coming years. And the DSL network will still be with us, I think, for many years forward. So both network will exist simultaneously.

[Operator Instructions] We have a from Ondrej Cabejšek.

One follow-up question for me, please. Now that you're deploying fiber already and you have set out this target, I know you've sort of not wanted to answer this question in the previous calls, but is there any comment at this stage that you can make on fiber CapEx, at least for what you're seeing now and for the next year given that you do have a target already for the next 12 months?

So of course, we haven't gave guidance -- we haven't gave guidance for next year numbers yet. And we've said before that, of course, deploying fiber in such an aggressive manner will have effect on our CapEx. I don't know really how to define. It's not -- no, it's not that substantial. But of course, we've -- given the amount of households we're going to cover next year, there will be an increase in copper mainly next year. And I think later on, the pace would be a bit slower and maybe the effect on the CapEx will be slower, but they haven't gave guidance on those numbers. I'm not sure that we'll give them.

But if I may add, in reference to the Group CapEx, we don't think it's going to be a massive number percentage-wise. It's going to be maybe between 10% and 15% or so. So we don't think it's going to be a big hike in the numbers when -- [ where's the group right now ].

And one sort of question related to your overall free cash flow. Is there much that you can do over the short term in terms of managing your working capital? So that, for example, before the monetization of fiber kicks in, in a couple of quarters, you can sort of soften the pressure that you may have from any incremental CapEx from fiber via working capital management?

The free cash flow is impacted by the cash flow from the operations and the CapEx. And the net CapEx is impacted by demand of the sales of property. Some of the impacts of the coronavirus is that we have postponed some of the sales because we wanted the crisis to go away a little bit and the market to come back to itself. And we see that the market has pretty much beginning -- is beginning to come back to itself. So I think, as part of our property sales plan, we see some -- we could see some sales coming in maybe in the first half of '21, maybe even before. And that would be -- that would tend to mitigate the effects of the increase in CapEx that will be incurred by the fiber rollout.

And is there a number that you have in terms of the sort of portfolio that you are confident you can offload in the next, say, 1 or 2 years?

We haven't really published a number, but in our financial statements, there is a forecast of -- a cash flow forecast. And after the call, you should talk to the IR guy or Naftali and will give you some more insight about this.

There are no further questions at this time. I would like to remind participants that a replay is scheduled to begin in a period of 3 hours on the company's website at www.bezeq.co.il. Mr. Rothenberg, would you like to make your concluding statement?

Yes. I would like to thank you all for taking the time to join us today. Should you have any follow-up questions, please feel free to contact our Investor Relations department. Thank you.

Thank you. This concludes Bezeq's Third Quarter 2020 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.