Israel's Hot Telecom swings to Q2 profit

Israel's second-largest telecommunications company Hot Telecommunication Systems Ltd. said Wednesday that it swung to a second-quarter net profit of 78 million shekels ($21.9 million), after reporting a loss in the second quarter of 2010.

The profit stemmed mainly from improved performance of the company's television service, which attracted more customers and recorded more sales of value-added packages, unlike the second quarter of 2010 when the television unit suffered losses.

Total revenue rose 2% to ILS824 million.Hot's board recently approved a ILS1.3 billion acquisition of mobile operator Mirs Communications Ltd, a deal that will create a more substantial competitor for Israel's telecom giant Bezeq.

But the deal has yet to receive regulatory approval, and some of Hot's institutional investors are objecting to the deal, saying the price is too high. Amir Adar, analyst at Migdal Capital Markets, a Tel Aviv brokerage, wrote in a report that despite Hot's good second-quarter results, much of the company's future depends on the Mirs deal.

At 0958 GMT, shares of Hot were up ILS1.75, or 3.7%, at ILS49.25, in a higher Tel Aviv market.

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