Elovitch looks to sell Smile businesses to Drahi or Ben-Dov

Smile will become a shell through which Shaul Elovitch will acquire Bezeq.

Shaul Elovitch owns 77% of 012 Smile.Communications Ltd. (Nasdaq:SMLC; TASE: SMLC) through Eurocom Group subsidiary Internet Gold Golden Lines Ltd. (Nasdaq: IGLD; TASE:IGLD). He is already in talks to sell Smile's international calls carrier and Internet services provider businesses to Patrick Drahi, the largest shareholder in Hot Cable Systems Media Ltd. (TASE: HOT), or to Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), soon to be controlled by Ilan Ben-Dov.

Smile will become a shell through which Shaul Elovitch will acquire 30.6% of Bezeq The Israeli Telecommunication Co. Ltd. (TASE: BEZQ) from Ap-Sab-Ar Holdings Ltd. (the Apax Partners-Saban Capital Group Inc.-Arkin consortium).

A deal for the sale of Smile's businesses will be made for an estimated NIS 1 billion. Both Ben-Dov and Drahi are interested because Smile's businesses can be a springboard into the inland telephony market, especially now that HOT cannot be an ISP and Partner is only just starting out in this business.

Smile controls a third of both Israel's international calls and ISP markets. It is a profitable and growing company. It once tried to enter the cellular market in order to counter Partner's entry into the ISP market. Smile, which has no ties with a telecommunications infrastructure company, has a problem and is at the mercy of the regulator. It needs protection from the expansion of competition in its areas of business even as it is blocked from becoming a mobile virtual network operator (MVNO) because they do not yet exist in Israel.

Published by Globes [online], Israel business news - www.globes-online.com - on October 25, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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