In the wake of this morning's Supreme Court ruling that Bezeq The Israeli Telecommunication Co. Ltd. (TASE: BEZQ) may not acquire the majority holding in satellite broadcaster YES, officially known as DBS Satellite Services (1998) Ltd., the Antitrust Authority will give Bezeq and YES minority shareholder Eurocom Group a few months to end their partnership in the company. If the parties fail to reach a deal to liquidate the partnership, the Antitrust Authority will order them to do so and set a deadline.
The Antitrust Authority the Bezeq-Eurocom partnership in YES, because the two companies are competitors in other telecommunications sectors, and the partnership is improper and damages competition. The two companies own competing international calls carriers and Internet services providers (ISP): Bezeq's Bezeq International Ltd. and Eurocom's 012 Smile.Communications Ltd. (Nasdaq:SMLC; TASE: SMLC).
Bezeq and Eurocom also have a disputatious relationship and their power struggles hurts YES. For example, there is the case when YES wanted to offer a TV, ISP and international calls carrier package with Smile, which Bezeq torpedoed.
Liquidating the Bezeq-Eurocom partnership in YES will create a new situation in Israel's telecommunications market because Bezeq wants to introduce Internet Protocol TV (IPTV), which it had hoped to combine with YES's satellite service. This is no longer an option.
In fact, the Antitrust Authority's position leaves Bezeq with no option but to sell its 49.8% holding in YES to Eurocom, which owns 32.6%, and then decide how to set up an independent IPTV network.
Published by Globes [online], Israel business news - www.globes-online.com - on August 20, 2009
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