There is skepticism about the success of the tender to sell International Television Holdings (Tevel) the banks are planning to hold in a few weeks. Communications market sources said that if the tender’s minimum price were set at $1,400 per subscriber, this would deter financial investors, because an investment would not generate a sufficient return.
The sources said that while a link between wireless and cable was logical, even more now than a year or two ago when Partner Communications Co. Ltd. (Nasdaq: PTNR; TASE:PTNR; LSE:PCCD) tried to take over cable, internal consideration at wireless operators might prevent them from participating in the tender.
Cellcom Israel Ltd. is now going through a change in ownership, and IDB Holding Corp. Ltd. (TASE:IDBH) has to raise money and receive dividends to finance its acquisition. It will be hard for IDB to finance another acquisition of a cable company, because this would greatly increase its leverage. It should also be borne in mind that Cellcom’s next chairman, Ami Erel, when he was CEO of Discount Investment Corporation Ltd. (TASE:DISI), sold the company’s stake in Tevel.
“In the US, cable companies went through hard times. They are now successful again, with per subscriber value reaching $2,000 or more, but the situation in Israel is different,” said an industry source. “The problem is management of the cable companies, which suffer from divided ownership.”
It was reported yesterday that the banks would sell Tevel soon, and that the option of a merger of Tevel and Matav-Cable Systems Media Ltd. (Nasdaq: MATV; TASE:MATV), as a prelude to a merger of all of Israel’s three cable companies, was off the agenda. This is because Matav controlling shareholder Delek - Investments and Properties Ltd., controlled by Yitzhak Tshuva through Delek Group Ltd. (TASE:DLEKG), could not reach an agreement with the banks on the sale of their holdings in Tevel.
Supervisor of Banks Yoav Lehman and Antitrust Authority director general Dror Strum have ordered the banks to sell their holdings in Tevel by the end of the year. Sources close to the cable companies believe that wireless operators Cellcom and will participate in the tender, which will probably be designed for the highest bidder to win. An overseas investment entity and Matav might also submit bids.
Published by Globes [online], Israel business news - www.globes.co.il - on August 23, 2005