The Restricted Trade Practices Tribunal today approved the merger between Bezeq The Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and satellite broadcaster YES, with restrictions. The court dismissed all the reasons cited by the Antitrust Authority against the merger. Those objections forced Bezeq to file appeals and undertake a prolonged legal process.
Bezeq currently owns 49.8% of YES, Eurocom Group owns 30%, Polar Investments Ltd. (TASE: PLR) owns 7.92%, Gilat Satellite Networks Ltd. (Nasdaq: GILT; TASE: GILT) owns 5.01%, and Lidan Ltd. owns 4.66%.
The Antitrust Authority objected to the merger between Bezeq and YES, formally known as DBS Satellite Services (1998) Ltd., on the grounds that Bezeq would control two key broadcasting infrastructures: satellite television and the Internet protocol television (IPTV), now under development.
The Restricted Trade Practices Tribunal dismissed the Antitrust Authority's arguments, after the judges repeatedly told it to reach a settlement and set the conditions for the merger. When the Antitrust Authority failed to do so, the judges set their own compromise proposals several months ago. These are similar to the ones in today's ruling.
The first condition is that if Bezeq decides to go ahead with the merger, it will be required to unbundle its next-generation network (NGN) to make it available to other telecommunications operators, enabling them to provide a range of services that the Ministry of Communications will determine. This condition ensures that Bezeq's NGN will be open to all players, and the company will not be able to object to new broadcasters using the network.
The Restricted Trade Practices Tribunal also set a timetable for setting up the NGN. 30% of households, and not fewer than 600,000 households, must be covered within a year of the decision; 50% of households, and not fewer than 900,000 households, must be covered within two years of the decision; and 80% of households, and not fewer than 1.6 million households, must be covered within three years.
The third condition stipulates that so long as there is not at least one competitor to YES transmitting broadcasts over Bezeq infrastructure, with 100,000 active subscribers (alone or with others) or NIS 10 million in monthly revenue from broadcasting over three consecutive months, YES will only be permitted to provide new two-way services (such as video-on-demand (VOD) or interactive games) via the Bezeq infrastructure.
Bezeq must continue to keep YES on the air and may not transfer subscribers to its IPTV service. This is important to Eurocom, which had demanded the dismantling of the partnership with Bezeq because of conflicts of interest.
The next condition is that Bezeq will allow open access to any entity that meets threshold conditions for broadcasting over Bezeq's infrastructure, and the terms and fees must be uniform and reasonable.
In order to help Eurocom and to avoid harm to its interests, the Restricted Trade Practices Tribunal ruled that Bezeq may not provide or accept products or services to YES or receive them from YES, unless at least 75% of YES's directors agree.
Bezeq will provide a NIS 200 million bank guarantee to ensure that these conditions are complied with.
Published by Globes [online], Israel business news - www.globes-online.com - on February 4, 2009
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