Is HOT Telecommunication Systems Ltd. (TASE: HOT) apologizing for not obtaining permission for its sales offer two weeks ago, which has shaken the telecommunications market? Sources inform ''Globes'' that, in its response to a letter from the Ministry of Communications, HOT says that if it did not seek official permission for its sales offer, then it requests that its response should be considered as an application.
In the letter, HOT says that it did not require permission for its sales offer because it is not for a service package, but a triple play package that it is permitted to sell under the terms of its license, together with an offer to provide Internet access via its subsidiary.
HOT also contends that it offered the same package to all Internet service providers (ISPs), a claim that is denied by all the ISPs. In the response, HOT tries to show that the offer complies with all Ministry of Communications regulations, and that it is nothing exceptional.
HOT's offer has created an uproar in the telecommunications market in the past two weeks, since it is offering Internet service of 100 Mbps at NIS 20 per month for people who buy its triple play package, which includes free landline and mobile telephone calls to all destinations, all cable TV services, including HDTV stations and an HDTV set-top-box, and Internet access via subsidiary HOT.net for NIS 329 per month.
As "Globes" revealed, the Ministry of Communications has concluded that HOT's package has a great many holes, and that the company apparently violated the terms of its license in that it did not request prior permission. The ministry apparently believes that HOT violated the structural separation rules that apply to it, and that it is making a forbidden cross subsidy.
However, the Ministry of Communications, to the chagrin of HOT's ISP competitors, has no intention of blocking the company. This has caused the ISPs to argue that the ministry is improperly discriminating in favor of HOT, shattering the policies that Minister of Communications Moshe Kahlon has announced, in particular the establishment of four telecommunications groups.
HOT's offer creates a big problem for the ISPs, which are facing a higher subscriber churn rate and sharply lower average revenue per user (ARPU) as they try to keep customers.
HOT's share price fell 0.3% by mid-afternoon today to NIS 41.17, giving a market cap of NIS 3.2 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on February 27, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012