Welcome, everyone, and thank you for joining us on Bezeq third quarter earnings call. I am Yohai Benita, CFO of the Bezeq Group. Joining me today are Mr. Tomer Raved, Bezeq's Executive Chairman, Mr. Nir David, CEO of Bezeq Fixed -Line, and Mr. Ilan Sigal, CEO of Pelephone and yes. Before we begin, please review the safe harbor statement on slide two of our presentation, which applies to any statement made during today's call. Following our prepared remarks, we will open the call for Q&A. With that said, let me now turn the call over to Tomer for his opening remarks. After his introduction, I will continue the presentation of our group's financial highlights, followed by Nir, who will discuss Bezeq Fixed -Line results, and Ilan, who will cover the results from Pelephone and yes.
I will then continue the Bezeq International results, and Tomer will discuss the group's new growth initiatives. Tomer.
Thank you, Yohai, and I am glad to see all of you joining us today. Our third quarter results demonstrate the strengths of the Bezeq Group and the significant progress we have made in executing our strategy. The returns on our investment in national infrastructure are evident across all of the group business segments. Looking ahead, we intend to lead the growth engines in the coming decade, strengthening Israel's position as a global communication hub through the subsea cable project, accelerating cloud and cybersecurity services for business customers, expanding fiber optic network coverage to approximately 3.1 million households, and leading 5G deployment through Pelephone. Our strong cash flow and financial resilience enable us to keep leading the market, investing in groundbreaking innovation, and delivering long-term added value to our shareholders. Let's now move to slide three, where we show Q3 highlights.
We posted a particularly strong quarter, with results exceeding expectations and forecasts. Core revenues grew 2.3% to ILS 2 billion, and comp EBITDA surpassed the ILS 1 billion mark for the first time and was up 8%, while comp net profit rose 44% to ILS 372 million. These impressive results keep us firmly on track to meet our updated annual targets. In Q3, we completed a buyback plan of ILS 100 million as part of our multiyear envelope of ILS 800 million. This follows the completion of our previous buyback plan of ILS 150 million. Total dividends and buyback in 2026 so far amount to ILS 1.2 billion. As we have previously communicated to the market, we are moving ahead on different fronts with new synergistic investment opportunities. This week, Pelephone signed an agreement to acquire Wecom Mobile.
We will continue to develop and grow our digital infrastructure activities with an emphasis on the international subsea cable project. Last week, we signed a non-binding MOU with Adgar Investments and Development for the joint establishment and operation of data centers, and we are continuing to evaluate additional acquisition opportunities all the time. I will go into more detail later in the presentation. Fiber subs were up 15%, and take-up reached 36%, with approximately 3.1 million homes passed. 5G continued to drive cellular market performance and subscriber plans. We were up 12% year-over-year. ARPU increased year-over-year across retail broadband and yes, up 4.4% and 8.5% respectively. Turning to slide four, we see the tech and business roadmap you all know on track to deliver our 2029 KPIs, from increasing fiber deployment and take-up, expansion of 5G, and growth in TV and fiber bundle.
We are building for durable growth, superior customer experience, and operating efficiency. On slide five, we summarize our Q3 financial achievements. Note that net debt was up mainly due to the timing differences in dividend payments this quarter. Slide six highlights our key KPIs for each of our businesses. Broadband retail ARPU continued to grow year-over-year to ILS 142, and we recorded an increase in yes ARPU due to fiber growth and revenues from the partner transaction. Pelephone grew 5G subscriber plans to 1.51 million, and 5G MAX subs grew 260,000 today. We are on track to reach our target of 300,000 5G MAX subscribers by year-end. I will now hand the call back to Yohai, who will review our financials in more detail.
Thank you, Tomer. Let's turn to slide seven for the group's Q3 highlights. Core revenue rose 2.3% to more than ILS 2 billion, representing approximately 94% of group's revenues. Comp EBITDA grew 8% to slightly more than ILS 1 billion, and comp net profit grew 44%, reaching ILS 372 million due to higher revenues and lower financing and operating expenses after adjusting for the change in yes valuation in the third quarter of 2025. Excluding the impact of the cancellation of the provision for the Universal Fiber Fund, comp EBITDA increased 5.2%, and comp net profit rose 36%. Free cash flow was ILS 249 million and was 25% down due to changes in working capital at Pelephone. Moving to slide eight, we show our results for the first nine months of 2026. Core revenues were up 3%, driven by growth across all key group segments.
Comp EBITDA was up 5.1%, and comp net profit grew 27%. Free cash flow was up 4.4% and reached ILS 859 million. Turning to slide nine, we show our Q3 operating expenses. Operating and depreciation expenses were impacted by changes in yes valuation in the third quarter of 2025. After excluding the impact of the changes in valuation, operating expenses decreased approximately ILS 59 million, and depreciation expenses decreased approximately ILS 34 million. Slide 10 shows our quarterly operational metrics. We recorded growth in wholesale broadband subscribers and achieved higher ARPU year-over-year for retail broadband and yes. Following the change in Pelephone subscribers methodology, cellular subscribers grew 0.7% year-over-year on a comparable basis, as growth in postpaid subscribers more than offset the decline in prepaid subscribers. Slide 11 highlights our balanced capital structure.
Net debt increased by ILS 896 million to ILS 5.5 billion, with a net debt-to-comp EBITDA ratio at 1.6 x. As Tomer mentioned, the increase in net debt was mainly due to timing differences in the payment of dividends. Our credit ratings remain within the AA group, with stable outlook from both rating agencies. Turning to slide 12 on shareholder remuneration. In the third quarter, we completed a buyback plan of ILS 100 million as part of our multi-year envelope of ILS 800 million. This follows the completions of our previous buyback plan of ILS 150 million. On slide 13 through 15, we show our 2026 outlook and 2029 targets, which are unchanged. We will continue to focus on maintaining our AA level rating and striving to increase shareholder remuneration. I will now hand the call to Nir for fixed -line results.
Thank you, Yohai. Our strong quarterly result demonstrate our strength and the continued growth of our core activities, alongside investment in the company's future growth engine. We will continue to lead Israel's AI revolution by integrating advanced tools into the group operations. Over the past year, 3 million calls were handled by Ron, Bezeq digital agent. We will continue to press our strategy, invest in advanced infrastructures and future growth engine, leading through innovation, and provide our customer with the most advanced high-quality solution. Turning to slide 16, fixed line core revenues increased 1.4% to ILS 1.01 billion, driven by higher revenues from transmission and data communication, cloud and digital services, and infrastructure project. Fiber deployment continue as we reach over 3.07 million homes passed, with a take-up rate of 36%. Following the slide, the next slide, we show Q3 financial highlights.
Comp EBITDA rose 5.6%, and comp net profit rose 32%, driven by higher revenues and lower operating, depreciation, and financial expenses. Free cash flow was stable in Q3 and reached ILS 875 million in the first nine months of 2026, compared to ILS 700 million in the corresponding period. Turning to the next slide, we show continued fiber deployment reaching approximately 3.1 million homes passed, with almost 1.1 million active subscribers on our fiber networks today. They represent 74% of total broadband subscriber and take-up rate of 36%. Retail broadband ARPU continued to growth and rose 4.4% year-over-year to ILS 142. Moving to slide 19, we show the take-up trends. Retail fiber take-ups reached 660,000, or 17% of total retail subscribers. Wholesale fibers take-ups reached 435,000, 26% growth year-over-year.
Turning to the next slide, broadband revenue were down 2.2% and were impacted by the MOC decrease on the wholesale tariffs in Q2 2026. Transmission and data revenues grew 5.8% to ILS 328 million due to higher revenues from metro transmission services. Cloud and digital revenue increased 2.2%, driven by higher revenues from virtual exchanges and cloud services. Other revenue rose 26.2% due to higher revenues from infrastructure projects. Moving to slide 21, we show our operating expenses. As fiber deployment and penetration have grown, we are seeing the result in lower operating expenses, which decreased by 21% due to lower expenses of fiber installation and materials. In addition, operating expenses were positively impacted by the cancellation of the provision for the universal fiber fund. With that, I will now turn the call over to Ilan to discuss Pelephone and yes.
Thank you, Nir. The financial results reflect the continued strength of Pelephone and yes, and the success of our business strategy, as demonstrated by consistent growth improvement, profitability, and the strengthening of our growth engines. Turning to slide 22, Pelephone comp EBITDA and comp net profit increased due to higher revenues and lower operating expenses, resulting from the cancellation of the provision for the Universal Fiber Fund, among others. We delivered strong subscriber momentum this quarter. After adjusting our numbers to reflect the one-time reduction in data subscribers, postpaid subscribers increased by 11,000. Sequentially, 5G postpaid subscribers grew by 49,000, reaching 1.51 million, or 66% of postpaid. In parallel, 5G MAX subscriber plans continued to expand, reaching 260,000 today, reflecting customers' increased demand for premium connectivity. ARPU was up ILS 3 sequentially and flat year-over-year.
In addition, as mentioned, this week we signed an agreement to acquire Wecom Mobile. Turning to slide 23, you can see the detailed financial performance this quarter, which reflected these dynamics. Comp EBITDA grew 5.4% and comp net profit grew 19%. Free cash flow was impacted by changes in working capital, mainly from payments to employees due to the signing of a new collective agreement and the timing of end-user equipment. On slide 24, we highlight continued growth in 5G adoption with 66% of postpaid customers now on 5G plans. We remain well-positioned to capture future data and service revenues upside. On slide 25, we show revenues from services and ARPU. Revenues from services continued to increase and were up almost 1% year-over-year. Moving to yes on slide 26.
Yes delivered a strong quarter with the revenues growing 15% to ILS 370 million from the highest quarterly revenues since 2018. ARPU reached a record of ILS 205, driven by continued growth in the TV+ fiber bundle and revenues from the partner transaction. Slide 27 highlights our key financial metrics in Q3. We recorded the highest comp EBITDA and comp net profit since 2016, respectively driven by higher revenues and streamlining of the expenses due to the migration from satellite broadcasting. This is the third consecutive quarter of comp net profit. Free cash flow in the first nine months of 2026 was ILS 20 million compared to negative free cash flow of ILS 1 million in the corresponding period. Free cash flow was impacted by higher profits and changes in working capital.
Moving to slide 28, fiber subscribers increased to 160,000 today, up 50,000 year-over-year, while migration to IP continues with 91% of yes customers now on IP platforms. With that, I will hand the call back to Yohai for Bezeq International's results.
Thank you, Ilan. Finally, turning to Bezeq International on slide 29. Revenues from business customers decreased 9.6% to ILS 227 million due to lower revenues from integration activities and international calls, partly offset by higher revenues from business services. Comp EBITDA and comp net profit were stable due to a decrease in operating expenses resulting from the cancellation of the provision for the Universal Fiber Fund, among others. We continue to focus on expanding activities in areas with high growth potential alongside promoting efficiency and business transformation processes with the goal of continuing to improve profitability and strengthen our position as our customers' leading technological partner. As reported last week, we signed a non-binding MOU with Adgar for the joint establishment and operation of a 16 MW colocation data centers in Petah Tikva. I will now hand the call back to Tomer to discuss our new growth initiatives.
These are the first time we are showing these slides, so I hope you're all focused and ready. I would like to highlight our new growth initiatives over the next few slides. Slide 31, which is a familiar slide, which really outlines our disciplined financial approach. First, our cash flow funds maintenance CapEx, while we maintain our credit rating within the AA group. On that foundation, we invest in growth initiatives, both new CapEx and M&A, with the goal of growing free cash flow and in turn, shareholder returns. Our current leverage level gives us the flexibility to capitalize on these opportunities. On slide 32, explains why subsea cables are our main growth initiatives. The expansions of cloud services, AI, and data centers are driving demand for international data traffic.
Traffic between Europe and Asia grew at an average annual rate of 34% between 2020 and 2024, and more than 90% of it is concentrated along the Red Sea route, creating a clear need for additional capacity and alternative routes. Israel's geographic location allows it to serve as an alternative telecom bridge between Europe and Asia, including along the potential India-Middle East-Europe Economic Corridor, known as IMEC, adding capacity, diversifying traffic routes, and enhancing resilience. On slide 33, we provide a little bit more details and more to come on our subsea cable activities. Our cable partnership with Telecom Italia Sparkle is progressing well and in its final stages prior to signing. The group's investment is estimated at approximately ILS 250 million, spread over three years. Strong demand for capacity is reflected in customers' willingness to enter into pre-sale agreements in advance, enabling a faster return on investment.
We expect most revenue to be generated during the first five to six years. Followed by ongoing but lower maintenance revenues. We expect the transaction's IRR to exceed 20%. In addition to our share in the project, Bezeq will provide the terrestrial segment to the partnership for additional consideration, and at a later stage, we will examine laying an additional cable together with Sparkle. In parallel, together with our external advisors, we are in discussions and negotiations with several companies for the construction and laying of an independent cable, 100% owned by Bezeq. We bring proven experience to these projects. JONAH, Bezeq International already own cable, has connected Tel Aviv to Bari, Italy, since 2012. We're also examining the acquisition of companies in this field in the Mediterranean region. Moving to slide 34, return to data centers.
Bezeq International already provide colocation hosting services in five data centers with total capacity of 13 MW. Last week, we signed a non-binding MOU with Adgar Investments and Development to jointly establish a data center for telecom service providers with a capacity of at least 16 MW on Adgar-owned land in Petah Tikva, Israel, based on a revenue share model. Adgar will provide building and carry out the construction works, while Bezeq will purchase the data center equipment and systems, lead implementation through commercial readiness, and provide operation and management services. Each party's investment in this project is estimated at approximately ILS 200 million-ILS 250 million, mostly in 2027 and 2028. We expect commercial operation to begin in 2028.
As occupancy increases, we expect the project to generate annual revenues of approximately ILS 50 million-ILS 80 million and annual EBITDA of approximately ILS 25 million-ILS 40 million, not including potential synergies with our existing telecom service to data centers. On slide 35, as Ilan mentioned, Pelephone signed an agreement to acquire the entire share of capital of Wecom Mobile for a total amount of ILS 265 million, realizing synergies in operating cost in the short term and in network and frequency cost over the medium to long term may contribute an estimated ILS 50 million-ILS 100 million to EBITDA over the short and long term. Following the completion of three successful acquisitions, we continue to look for additional M&A across the group on a limited scale, but to strengthen and complement our existing capabilities.
On slide 36, to summarize, the group is focused on evaluating new investment opportunities with emphasis on digital infrastructure that generates synergies with our existing operations and expand our growth engines. Our current financial structure and leverage level give us the flexibility to advance these investments, which are intended to diversify our source of revenue, strengthen our financial resilience, and enhance our shareholder value over the long term. Our aim is to leverage our existing capabilities and advantages to promote synergistic investments and create shareholder value. I will now turn the call back to Yohai.
Thank you. I will now open the Q&A session. If you would like to ask a question, please raise your hand virtually. As you hear your name, please be sure to unmute your microphone and ask your question. For the benefit of the people in the room, please introduce yourself and share the name of the company you represent. We will address the questions as we see the hands raised. I will now pause to poll for questions. Hi, Rohit.
Thank you so much. Rohit Modi from Citi Research. I have three, please. Firstly, starting with results and outlook. Firstly, congratulations on great set of results. On your outlook, and given the performance in first nine months, it looks like very conservative for the fourth quarter, given it looks like you're expecting a decline in EBITDA numbers in fourth quarter. Just trying to understand what's the rationale behind it. Why being cautious around the fourth quarter right now? Second question is basically on the structural separation, your discussion, any update around that, and do you see any risk on those discussions given the political situation right now? There's a change in government. Do you see any kind of risks to your discussions on structural separations?
Thirdly, on your growth initiatives, I'm just trying to understand, you have this data center capacity JV recently, but how much you want to stretch your balance sheet for these kind of new growth initiatives, including the dividend policy you have currently intact? Any color on that would be really helpful. Thank you.
I'll begin, and I'll let Yohai chime in. First, we're not expecting any softness in Q4, and I want to be very, very clear on how we approach that. We updated our guidance because we saw that we are 10% or more above, and we updated guidance in August for EBITDA and net income. We feel very strong and very confident about achieving these results. But as long there is no additional 10% increase above the current guidance, we're not updating the street. If we will see that on the roll-forward basis, the increase is more than 10%, then we would update the street on either of these metrics, and that's the way we already approach things always, actually. To be clear, we do not expect softness in Q4. I understand the question, but that's not the result we're expecting.
Very confident to achieve the target or even beating them. Second question, very important one, structural separation. We did not feel any impact by the political situation on the process, which is being run by the professional agencies in the Competition Authority, antitrust. MOF and MOC, Ministry of Finance, Ministry of Communications. It sits within the professional level inter-minister office and team. We are having meetings with them on a weekly basis. We are in the final last mile. We hope to hear the hearing coming out in the coming weeks. We, to date, did not see any impact by the political situation, but that may be the case going forward. To that point, it didn't really impact the pace of progress of the process. We do not have a specific timeline. We are happy that this process finally started after a decade.
In the past six to nine months, finally formal process out in the open, but we are waiting for the results, the same as you all guys on the line. On the third question, we are not looking to stretch our balance sheet at all, especially not data center-related projects, to be clear. We have very strong discipline, and I think I outlined that in the slides earlier that touches all of that. On data center specific, we are only expanding the colocation existing business, which is very profitable, if not significant investment. We are not going to go the real estate play, 100 MW, like other real estate and data center player globally or locally. We are playing kind of our bread and butter, which is really colocation, B2B solutions for banks and hospital and HMOs, government agencies that needs business hosting and cloud solutions.
It is completely different from the large AI hyperscaler data center play, which require significant balance sheet commitment, and by the way, in our view, generate lower IRR from the returns we expect to see.
Okay, thank you. Next question is from Tavi. Hi, Tavi.
Hi, guys. Can you hear me okay?
Yeah, we can hear you.
Thanks for taking my questions, and congrats on the strong results. Interestingly, Tomer Raved, that is three questions which were identical to mine, so that is always helpful. I wanted to ask on more longer term kind of things. Some of the trends we are seeing in the telco world is AI agents negotiating on your behalf to renegotiate the packages. So that is one. Do you see that as a risk in Israel? Two is Starlink potentially competing down the road on fixed line services. Then three is the MOC review of enforcing universal router to kind of make it easier for customer to migrate from one to the other. How do you look at it? I guess it is not really down to this quarter, but more you think about it down the road.
I will start. First, we are well familiar with the points you raised, good ones. Look, on AI agents, first, we are leveraging these capabilities internally, and we are using agents. As Nir and Ilan repeatedly mentioned and presenting, we have agent across the group to sell and fix solutions. We have thousands of calls every day that incoming calls and outgoing calls with the bots. We are monitoring these trends, but we are also blocking, like many other companies, the ability of bot to call and negotiate. It is not really a trend that we allow, and there are great tools to deal with it and actually benefit from it, right? There is a way to sell more and not just renegotiate price. To date, not a risk, and we are blocking the ability to use these tools with our live agents and with our people agents. That number one.
Starlink, we see more as a collaboration opportunity, and Ilan can expand on mobile. On fixed, it is not a risk. Israel is the densest country. Satellite cannot replace fiber in any place in the world. If Starlink want to buy a cellular company in Israel, that is great, but that could be a great ARPU uplift and a collaboration opportunity for the cellular market. So we do not expect them to really impact the Israeli market or the competition here. Again, unless they want to join the party, which is great, but eventually they need infrastructure. So that is not a significant risk. I know it is a big buzz and risk in the U.S. where you have rural terrestrial areas with no fiber and no cellular coverage. Completely understand the risk.
Not in a dense country with Israel where the cost per passing is very low, and the environment, which is not just Israel, it is South Korea, it is Switzerland, it is Netherlands, much lower risk for these type of satellite solutions. The last point was around the universal router. That is not something that is realistic technologically and not a risk we saw. We saw an article like yourself and a few data points. The amount of technology and configuration invested in the routers does not really allow, and the MOC does not think it would allow for some sort of theoretical wholesale on the routers. So we do not view this as something that is realistic risk.
Okay. Thank you. Next question is from David Kaplan. Hi, David.
Hi. David from Psagot Sigma. Couple of questions. The first one, can you talk us through the Wecom acquisition a little bit? In terms of the number of subscribers there, we are not talking about what was a large competitor or significant competitor. So kind of what was the thought process in that one? Of course, how does that or how is that going to impact capital allocation and/or dividends and returns to shareholders? That is the first one. The second one I have is on Pelephone specifically. Cash flow has been There has been a little bit of a cash flow drag there because of the collective agreement there with the employees. So how much of that is left? What is the annual savings going forward, and how much longer are we going to see that drag on the cash flow of Pelephone?
First, on Wecom, we are happy to sign this very strategic investment. As you saw, and I just mentioned in the previous slide, this could generate ILS 50 million-ILS 100 million of incremental EBITDA on top of the double-digit current EBITDA that Wecom have with roughly 300,000 subscribers. This does not impact dividends, leverage. It is not a significant investment. If anything, this could create synergies that will reduce leverage going forward.
And improve shareholder return.
And improve shareholder return, of course, because of the incremental profitability. It does not impact capital allocation. It is not a significant needle mover from that perspective. It definitely contributes to the group profitability synergies and EBITDA, with very significant upside going forward. On Pelephone, and Yohai and Ilan can add, but the drag on working capital is not predominantly from the union collective agreement. It is actually from the chief controller office agreement renewal, where we buy the device ahead of time, a lot of equipment and inventory that we bought in the previous, in the past three to four months. This will continue to happen over the next three to four months. Very profitable business, but the inventory and the equipment we buy and sell to these 100-plus thousand customers.
We sell it back.
We sell it back and lease it, so that is a great business. But that is just because of the every 10 years renewal of that tender require equipment, and that is why you see the kind of short-term impact on working capital at Pelephone.
How much of that is left?
The money from the agreement will finish this quarter. We finish to.
I will add to what Ilan and Tomer mentioned. The majority of the retirement payments in Pelephone already happened in 2026. We expect some to be in 2027, 2028, but at much lower scale compared to what we see today. The benefit, we will start to see actually immediately, once the employee have retired. So 2027, we are already going to see that. I will remind us that on 2029, we have a target to keep the salaries expenses flat on a group level, compared to 2025. These kind of actions, what will allows us to meet this target, and we see it with a very positive contribution.
So just, sorry, if I can understand that last part. In Q4, we should see a similar impact on Pelephone from the employee agreements?
Not from the employee agreement, more from the-
More from the equipment tender.
Okay, thanks.
Okay, next question is from Ondrej from UBS, please. Hi.
Hi, everyone. Thank you for the presentation. Apologies, I joined late, so if I am asking something that has already been addressed. I have a couple of questions. I will go one by one, if I may. Just following up on the Wecom deal. First of all, again, congratulations, because I think this is the second time someone tried to buy them. Finally, we have got more consolidation in the market. I was just wondering, what is the difference between the, I guess, ILS 50 million of EBITDA accretion, that is just what Wecom presumably is generating today. How do we get to 100? Is that based on the assumption that there are full synergies achieved, some kind of cross-selling, market repair, or anything like that? That would be my first question, please.
There are two components. The 50 million reflect mostly OpEx and existing profitability from Wecom. The additional 50 million, or even more, is from network and frequency synergies that will take a little bit more time to achieve. Meaning, the short-term synergies would be roughly ILS 50 million. The long-term synergies will be at least ILS 100 million, because we have at least ILS 50 million, actually closer to ILS 60 million synergies from frequencies and network costs that are currently being paid to Cellcom.
Thank you.
One more thing that the Wecom customers, we probably will transfer them from 4G to 5G plans, and it is another addition of.
Synergies.
synergies, yeah.
But the kind of upside on the revenue side from cross-selling or upselling, that is not included in this number that you're guiding us?
Very limited. Very, very limited scale, correct.
Okay, thank you. Second question I had was on the fiber wholesale rates, which are obviously starting second quarter of 2026, having an impact after they reset. Now that we are approaching the end of 2026, do we have good visibility on whether something similar is going to happen into 2027? Or do we assume that the wholesale rates on fiber that we have today are going to continue going forward, i.e., there will be a good, favorable base into 2027 in terms of broadband growth?
Okay, just to recap, that is an excellent question. The wholesale rate, the wholesale tariff reform that happened six months ago was the last one, meaning the decision is to actually remove supervision from wholesale tariffs starting in 2028. So actually, 2027 is going to be the last year with regulatory supervision, meaning the ILS 58 on wholesale is not going to change again. If anything, there is more upside than downside on wholesale rates, given there is a free market starting in 2028, which is very, very consistent with what you see in the EU today.
Thank you. That is great. Then a final question, if I may. On the subsea cable project, I believe that the map that you showed indicates that there is obviously a terrestrial line, but then there is a line that crosses the Gulf of Oman, if I read this correctly. A couple of days ago, there was an article in the Financial Times that Iran is threatening to cut subsea cables in that gulf. So, I guess, is there a risk that this project might be derailed because of the geopolitical situation in the region?
It is actually the biggest opportunity.
Oh, yeah?
If Iran cuts the cable in the Strait of Hormuz, the need for our terrestrial bypass is even more important, because then we connect terrestrially Saudi, Emirates, and other countries in the Gulf by land. They do not need to go through Bab-el-Mandeb at the Red Sea. They do not need to go through the Strait of Hormuz. We are actually the solution in case, the 2x or 3x solution of what we model today if these type of actions are being taken, which I hope not. Exactly this type of event, whether it is accident or terrorist-related activities, that is exactly why you need redundancy. That is exactly why the Red Sea is not enough, why the Strait of Hormuz are not enough in terms of subsea cable. You need as many routes as possible. That is why the demand that we outlined earlier is exponential almost from hyperscalers.
They cannot afford to have one route or two routes. They need multiple routes. To cross the continent from Asia to Europe, Israel today is the only country, if you compare it to us, to Syria or Lebanon, as of today, that has the terrestrial infrastructure to support this bridge.
Interesting. Thank you. Final question shortly, if I may. I believe there is no more behind me. The ramp in terms of the data center at the DA, I guess you indicated this is short to mid-term. What does that actually mean? I guess we are starting in 2028 with a slow ramp and getting to ILS 50 million, maybe 2029 and 2030, and then getting to ILS 80 million of revenues. When can we expect to get there, I guess is the question?
It depends on the utilization, but within the first three to five years of the project, we are probably going to reach very high utilization, which will reflect these numbers. We will probably provide more specific numbers both on data centers and on cables in the coming quarters.
Thank you very much.
Okay. Thank you, Ondrej. If there are no further questions at this time, 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 investors relations department. We look forward to speaking to you on fourth quarter and year-end 2026 earnings call. Thank you.