The Supreme Court has overturned a lower court ruling and will not allow Bezeq The Israeli Telecommunication Co. Ltd. (TASE: BEZQ) to take over satellite broadcaster YES, officially known as DBS Satellite Services (1998) Ltd. The Supreme Court accepted the petition of the Antitrust Authority and YES minority shareholder Eurocom Group against a ruling by the Restrictive Trade Practices Tribunal to permit the takeover, with conditions.
The ruling could lead to a fundamental change in perspectives about ownership of YES, and gives Eurocom owner Shaul Elovitch a real opportunity to acquire the controlling interest in YES, and possibly of its parent company, Bezeq, later on.
The Supreme Court ruling is one of the most consequential in Israel's telecommunications market. By denying Bezeq's attempt to increase its stake in YES to over 50%, thereby acquiring the controlling interest in the company, the court has ended Bezeq's effort to merge with YES.
The big question now is whether Eurocom and Bezeq will launch a price war over YES, given the poor relations between the owners of the two companies. The Antitrust Authority also wants to dismantle the companies' joint control of the company. Another major question is whether Bezeq will now build an independent Internet Protocol television (IPTV) network. In its argument before the Supreme Court, Bezeq said that it not build an IPTV network if it was not allowed to take over YES.
Earlier this month, Eurocom Group lost the race to acquire the controlling interest in cellular operator Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) to Scailex Corp. ltd. (TASE: SCIX; Pink Sheets:SCIXF), controlled by Ilan Ben-Dov.
Bezeq owns 49.8% of YES, Eurocom owns 32,6%, Polar Communications Ltd. (TASE: PLRC) owns 7.9%, Gilat Satellite Networks Ltd. (Nasdaq: GILT; TASE: GILT) owns 5.01%, and Lidan Ltd. owns 4.66%. Bezeq's share rose 0.7% in early trading today to NIS 7.81
Published by Globes [online], Israel business news - www.globes-online.com - on August 20, 2009
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