One door closes and another opens. Only last week, Shaul Elovitch lost in the race for Partner, and now, a Supreme Court decision has suddenly handed him an opportunity to take over satellite broadcaster YES. Elovitch is not a spiritual type, and presumably sees in this turn of events one of life’s happy coincidences. Had it been Ilan Ben-Dov, who won Partner, he would have some way of saying that there is no such thing as coincidence, and that our lives run a predestined course.
The court has completely shaken up the communications market. It could be that, with this decision, it has set up a new communications group owned by Elovitch’s Eurocom, and that will in future include YES, Internet service provider and international carrier Smile 012, and perhaps wireless carrier Mirs as well. Had Elovitch bought Partner, such a group would presumably never have arisen. It is not clear that Elovitch could have bought Partner and YES at the same time. And since he could not have sold his stake in YES to anyone, because no-one would want to buy with Bezeq holding 49%, it turns out that luck was actually with him this week.
The interesting part of the court decision story is what will happen the day after, because, as the Antitrust Authority said at the hearing, its intention is to break up the partnership between the companies in YES. The question is, how much time will it give them to dismantle it? This is the most important question, because Bezeq has no way out other than to set up a competing infrastructure (IPTV). It will have to part with YES sooner or later, but is has no interest in selling YES in the short term, before it has a new network up and running. It is therefore highly important what the Antitrust Authority will do, and how much time it will allow the parties to dissolve the partnership.
If the decision has pinned down Bezeq, for Elovitch is a clear opportunity. In fact, as far as he is concerned, it’s a completely new game. It should be recalled that Elovitch owns Satcom, which provides satellite transponders to YES, which makes it a perfect vertical merger if he buys control of YES. He saves massive operating costs, and knows very well how to maximize efficiency in the use of transponders.
The question mark is over the future of the satellite platform with its technological limitations. In a world of value added services, and with no upstream channel, it is in an inferior position vis-à-vis ground-based networks. But despite what seems a limitation that restricts development, the fact is that, all over the world, satellite subscriber numbers keep growing. A return channel? There’s always the Internet.
Bezeq will now have to consider whether it sets up an IPTV platform, and under what brand. Although it appears that the company sees this as a strategic goal, it is not something to be taken for granted under the present owners. A new platform that will be obliged to be open to all, with many doubts about whether it will receive a broadcasting license, and under owners seeking an exit, looks a more difficult prposaition than ever this August.
Published by Globes [online], Israel business news - www.globes-online.com - on August 20, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009