The Ministry of Communications has approved, in an extraordinary move, eight service plans for Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ), allowing it to offer discounts to telephony customers. Bezeq will be allowed to offer fixed prices for a bank of call minutes to landline and mobile destinations. The approval comes after Bezeq promised the ministry that it will not petition the High Court of Justice against the ministry's ban on charging customers for naked ADSL service (an internet line with no telephony line).
The Ministry of Communications had blocked Bezeq's proposals for the service plans for six months, on the grounds that they would harm competition in the telephony market, even though they met the ministry's criteria for granting discounts.
The Ministry of Communications believes that so long as Bezeq charges NIS 25 per month for a naked ADSL line, it was keeping competitors out of the market, because the added fee rendered it not worthwhile for consumers to obtain telephony services from another company.
The Ministry of Communications cancelled the charge for a separate ADSL line, and Bezeq stopped collecting it from the beginning of April. But the ministry was afraid that Bezeq would petition the High Court of Justice against the decision, and some ministry officials were worried that the court would rule in Bezeq's favor.
Bezeq allayed the ministry's fears, paving the way for the ministry's approval of the company's new service plans. Bezeq realized that petitioning the High Court of Justice over naked ADSL did not service its strategic interests, because the ministry was liable to interpret a petition as an act of aggression, giving the ministry an excuse to take a harder line against the company. Bezeq also realized that a court hearing could take years, during which time it would have neither the fee from ADSL lines nor revenue from its service plans, putting it at a disadvantage against its competitors.
Bezeq's share price fell 2.1% by mid-afternoon today to NIS 5.71, giving a market cap of NIS 15.8 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on April 15, 2012
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