Minister of Communications Moshe Kahlon is threatening to break up Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) into a services company and infrastructures company if it does not agree, within two years, to implement the wholesale market, which will reduce the use prices for its infrastructures.
In the policy document, due to be published today, Kahlon has decided to insert a clause with the implied threat against Bezeq. It will require the company to make painful compromises on use prices for its infrastructures, otherwise, Kahlon will be compelled to take sharp action that will lead to the splitting of the company in two.
Kahlon's threat has a timetable, since the Ministry of Communications is very worried that establishment of the wholesale market will be dragged out, which will slow development of the telecommunications market and investments. The threat was included in the policy statement, even though it already includes an explicit threat that the ministry will not abolish structural separation and price controls on Bezeq until it agrees to the wholesale market.
At the last minute, Kahlon also decided to include in the policy document the issue of HOT Telecommunication Systems Ltd's (TASE: HOT) triple play package. A senior Ministry of Communications official said that this package would be reviewed because the company's cable TV monopoly subsidizes the other services in the package, with the result that other operators cannot offer similar packages.
The Ministry of Communications realized that there is a problem with HOT's triple play package, and the policy document will abolish it until mobile carriers Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) and Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) will be able to offer TV services. At that point, all restrictions on telecommunications carriers will be lifted so they will be able to offer full services.
Bezeq's share price rose 1.3% in morning trading to NIS 6.35, giving a market cap of NIS 17 billion. HOT's share price fell 2.7% to NIS 41.10, giving a market cap of NIS 3.2 billion. Cellcom's share price rose 4% to NIS 45.20, after rising 1.9% in New York yesterday to $11.65, giving a market cap of $1.1 billion, and Partner's share price rose 2.2% to NIS 27.46, after rising 5.3% in New York yesterday to $7.17, giving a market cap of $1.1 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on April 18, 2012
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