Bezeq Fixed-Line: Fiber Is Big Enough, but Where Does the Value Really Lock In

What This Is Really Testing

The main article argued that Bezeq Fixed-Line now carries the group’s core economics. This follow-up isolates one question only: once fiber is already large enough, where does the value really lock in. The answer is not “in every new connection.” Value locks in only if fiber penetration pulls the base far enough toward retail subscribers with rising ARPU, while copper and telephony keep eroding in the background.

In 2025, Bezeq Fixed-Line generated NIS 3.94 billion of core revenues, NIS 2.599 billion of adjusted EBITDA, and NIS 969 million of free cash flow. This is no longer one operating engine among several. It is the engine carrying most of the group’s economics. That is exactly why the next distinction matters: a bigger network is not automatically a more valuable business. Wholesale can help fill the network, but the monetization target Bezeq itself chose to publish for 2029 is retail broadband ARPU of about NIS 150, not a wholesale yield target. That is the center of the story.

Fiber Has Already Cleared the Scale Test

On deployment and penetration, the main doubt is already closed. At year-end 2025, Bezeq Fixed-Line stood at 2.913 million homes passed, 993 thousand active fiber subscribers, including 628 thousand retail and 365 thousand wholesale. As of the report date, deployment had already reached roughly 2.95 million homes passed and active subscribers had risen to about 1.017 million, including roughly 637 thousand retail and 380 thousand wholesale. Put differently, fiber is no longer a small growth layer. It already carries about 69% of Bezeq’s broadband base.

The key point is not only the size of deployment, but the fact that the technology shift is no longer being driven by growth in total broadband lines. Total broadband lines barely moved, from 1.479 million at year-end 2024 to 1.473 million at year-end 2025. Inside that almost flat base, fiber connections jumped from 810 thousand to 993 thousand. This is no longer about expanding the market. It is about replacing an old base with a new one.

But this is also where the difficulty starts. Even with that fiber jump, revenues rose only 2.0% to NIS 4.428 billion, adjusted EBITDA rose only 0.9% to NIS 2.599 billion, and free cash flow fell 18.2% to NIS 969 million. Fiber is already large enough to change the structure of the business. It still has to prove it is large enough to produce cleaner economics.

But Not Every Fiber Subscriber Locks In the Same Value

This is exactly where the gap sits between “fiber is working” and “fiber has already locked in value.” Total retail broadband lines fell in 2025 from 1.008 million to 980 thousand, while wholesale broadband lines rose from 471 thousand to 493 thousand. Within that shift, retail fiber subscribers grew 20.5% to 628 thousand, while wholesale fiber subscribers grew 26.3% to 365 thousand. Bezeq is clearly filling the fiber network from both sides, but wholesale is growing faster.

That is not a negative datapoint. It is simply not the same economics. Wholesale matters because it utilizes the network, fills the asset, and supports revenue defense. But the target Bezeq chose to put on the table for 2029 is retail broadband ARPU of about NIS 150, versus NIS 136 in 2025 and NIS 138 in Q4. There is no parallel disclosed wholesale yield target in the presentation. That is a clear indication that management sees the real monetization test through the retail layer.

Management’s language around regulation supports that reading as well. In the investor presentation, Bezeq says the revised wholesale tariffs published by the Ministry of Communications are estimated to have no material effect on the group. If that is right, then the short question is not whether the tariff change breaks the story. The question is whether the next wave of additions arrives sufficiently through retail with better ARPU, and not only through more wholesale filling of the network.

Copper Is Still Taking Its Share

The clearest way to see why fiber still does not translate into automatic value is to go back to copper. Out of NIS 142 million of core-revenue growth in 2025, NIS 56 million was absorbed by lower telephony revenues, which fell from NIS 544 million to NIS 488 million. Active telephony lines fell from 1.383 million to 1.329 million, and monthly average revenue per line fell from NIS 32 to NIS 30. So even when the new layer is growing, the old layer is still pulling backward.

This is not only an accounting point. Bezeq is no longer building its future on copper, but it is still operating through a long overlap period in which both economics coexist. The copper network does not disappear overnight. The Minister of Communications’ decision from April 2025 set a phased framework for shutting down copper networks by 2030. Under that framework, the obligation to connect new retail and wholesale subscribers on copper was already canceled during 2025 wherever fiber is available, but an actual copper shutdown in a specific area will be allowed only after 85% of users in that area receive service over fiber. Full network closure is planned for the 2030-and-beyond stage, in areas where fiber will reach every residential unit.

In other words, the move into a fiber economy is still paying a double transition cost: Bezeq has to keep filling the new network while continuing to absorb telephony erosion on the old one, before the full savings and structural simplification really arrive. That is exactly why the question is no longer how many fibers were deployed, but where the next increment lands inside the revenue structure.

2029 Already Defines Where Value Will Be Judged

Bezeq Fixed-Line’s 2029 targets tell a much tighter story than deployment alone. The fiber deployment target is about 3.5 million homes passed, versus roughly 2.95 million at the report date. The take-up target is about 43%, versus 34% today. And the retail broadband ARPU target is about NIS 150, versus NIS 136 in 2025. Taken together, those three targets say something very simple: the next phase is no longer about “more network.” It is about penetration and price.

In rough order-of-magnitude terms, that target set implies about 1.5 million active fiber subscribers by 2029, versus 1.017 million at the report date. That means almost half a million additional subscribers on a little more than half a million additional homes passed. This is very different from the earlier phase of the project. It is driven less by digging and rollout, and more by the ability to convert an existing network into a deeper, stronger, and ideally more retail-heavy subscriber base.

That is why the retail-versus-wholesale debate is not technical. If most of the next growth arrives through wholesale, Bezeq can continue filling the network and defending core revenues. But if retail ARPU does not keep rising, and retail penetration does not move fast enough, then a large part of the value may remain at the level of a well-utilized infrastructure asset rather than turning fully into better economics for shareholders.

Conclusion

Bezeq Fixed-Line no longer has to prove that fiber works. It has to prove it knows how to turn penetration into retail value. That is a more precise test, and a tougher one. The fiber network is already large enough to carry the center of the group’s economics. The real question is how much of the next phase comes through direct customers at better pricing, and how much comes through a wholesale layer that fills the network but does not necessarily carry the same monetization quality.

At roughly NIS 21.4 billion of market value, daily turnover of about NIS 46.7 million, and near-zero short interest of 0.01% of float, this is not a stock the market reads as an existence story. The reading is much narrower: whether the fiber base, retail broadband ARPU, and the migration away from copper will connect quickly enough to turn NIS 3.94 billion of core revenues into cleaner EBITDA and cash.

The current thesis: fiber is already big enough. The next layer of value will arrive only if more of the growth comes through retail at better pricing, not just through more wholesale filling of the network.

The counter-thesis: a more wholesale-heavy mix may still be enough, because the network is already filling, the revised wholesale tariffs are estimated to be non-material, and core revenues are already growing even without another sharp ARPU jump.

What will decide it: over the next 2 to 4 quarters, the most important metric is not another homes-passed headline, but the relationship between retail fiber additions, retail broadband ARPU, and continuing telephony erosion.