Ilan Ben-Dov is the controlling shareholder of Sunny, cellular telephone instruments importer and Israeli representative of Samsung, whose cellular hand-sets have become hot property in the Israeli communications market. Ben-Dov decided yesterday to join the many businesspersons seeking to cut an Internet coupon. Achla ("Great!") is not only what investors have had to say about the stunning 550% yield the Sunny share has produced since the beginning of the year; it is also an Israeli Internet portal, 80% of whose shares Ben-Dov has just acquired. Ben-Dov refused to specify the size of his investment, but it is estimated at not more than a few hundred thousand dollars.
Achla’s Internet site was set up by Avi and Hagit Maor. Ben-Dov defines it as "Israel's most advanced search site". The other existing Israeli portals are Walla!, IOL, Tapuz and Netking. "Achla is a green portal", Ben-Dov notes in defence of his latest acquisition: "The content is decent, there is no link with sex sites".
"The emerging trend in the communications market is one of creating combined communications providers", Ben-Dov says. "As a result, we are seeing waves of acquisitions and the creation of partnerships, which are part of the trend". Bezeq last week obtained an option to acquire 50% of Walla!, at a market value of over $30 million.
In contrast to the Bezeq-Walla! deal, which is being transacted as part of a clear-cut strategy established by Bezeq general manager Amir Arel, of going into Internet content, Ben-Dov’s investment was chosen intuitively. He admits he does not know where we will find him in six months time: "I’ve started surfing, and I don’t know where I’ll end. But I sense that it is important for me to be present in the Internet medium".
Major entities have recently been investing in portals: Nokia-Eurocom in Tapuz, Reshet holding Netking, Bezeq holding Walla!, and now Sunny, holding Achla. Ben-Dov estimates that the combined communications market is heating up: "It seems reasonable to assume that, in future, cable TV too will enter into some activity in the field. Everything is simply linking up. The Internet is another medium, and the connection between it and the cellular field in which Sunny deals is an obvious move".
Ben-Dov, however, seeks to keep a low profile: "I’m still small fry. I don’t want to get anybody’s back up. The league in which Bezeq, Discount Investments, Yediot Ahronot and the Dankner group are members still seems too ambitious a goal for me. At the moment, I want to remain independent and unidentified. A side-show. In future, though, I will certainly consider some form of co-operation.
"What I perceive as being immediately applicable following my acquisition of Achla is differentiating Sunny’s telephony by infusing it with content. We are shortly due to go to market with a new cellular instrument, namely ‘Internet Phone’. This instrument, which has already been in existence in Korea for the past three months, will enable the user to surf the Internet".
The cellular communications networks currently in existence are capable of transmitting data at a speed of 9.6 kilobytes - much slower than the regular Internet. This being so, there will be a problem of traffic jams, and Sunny will have to address it. Ben-Dov explains that the acquisition of the portal will enable him "to adapt the network to cellular use. Not everything will pass through the network. Graphics and suchlike will not pass, but numerical data, e-mail and simple content will be able to pass. We have invested a great deal of money in developing the business. Sunny has undertaken to provide financing of up to $1 million for the continued development and operation of the site".
Sunny notably intends to utilise the positive momentum for raising up to NIS 1 million, through Leader. The issue will take place on the basis of the company’s Q2 reports. Ben-Dov declined to comment on this today, but did not conceal his satisfaction with the share’s behaviour: "Trading volumes in the security also increased recently. I hope we will soon reach the Tel-Aviv 100 list. We, unlike the other Internet shares, also sell".
Published by Israel's Business Arena July 13, 1999