JERUSALEM, Aug 24 (Reuters) - Bezeq Israel Telecom reported a 5 percent decline in quarterly net profit as revenue from telephone services continued to decline.
Bezeq, Israel's largest telecoms group, said on Thursday it earned 358 million shekels ($99 million) in the second quarter, down from 377 million a year earlier.
Revenue dipped 1.9 percent to 2.46 billion shekels, with telephony revenue down 7.2 percent and partly offset by high-speed Internet revenue growth of 2.3 percent.
Bezeq was forecast to earn 360 million shekels on revenue of 2.46 billion, according to a Reuters poll of analysts.
The company, which is facing regulatory uncertainty over a plan to merge its units, reiterated its 2017 net profit estimate of 1.4 billion shekels, compared with 1.24 billion in 2016.
Bezeq is also battling legal troubles. Its controlling shareholder Shaul Elovitch, CEO Stella Handler and a number of other officials related to the company and the Communications Ministry are under investigation in a securities probe by the Israel Securities Authority (ISA).
Elovitch was forced to step down as Bezeq's chairman while he and other officials have various restrictions imposed, such as not being able to work or leave the country. They have all denied any wrongdoing, while many details are being kept from the public under a court gag order at the request of the ISA.
Last week, acting chairman David Granot was briefly detained and released by Israeli police after being questioned on suspicion of bribery and money laundering.
"We have weathered through the recent events surrounding Bezeq and the increasing competition across all operating segments," Granot said on Thursday.
In Bezeq's fixed-line segment, where most of its growth stems, net profit slipped 2.8 percent.
Its Pelephone unit, Israel's third-largest mobile operator which faces stiff competition, saw a 161.5 percent jump in quarterly profit to 34 million shekels. Its subscriber base grew to 2.41 million from 2.26 million a year ago.
Bezeq said it would pay a dividend of 708 million shekels, or 0.26 shekel per share, for the first half of 2017, representing 100 percent of net profit.
($1 = 3.6107 shekels) (Reporting by Steven Scheer; Editing by Mark Potter)