Bezeq Israel Telecommunications Company Ltd. (TASE:BZEQ is strengthening its foothold in the IT and cloud infrastructure sector. The company today reported that the board of directors has approved the signing of a non-binding memorandum of understanding (MOU) with real estate company Adgar Investments and Development (TASE: ADGR) to jointly build a data center in Petah Tikva with a capacity of at least 16 megawatts.
Adgar was represented in the deal by Adv. Ron Gant, a partner at the Firon law firm. Following the announcement of the venture, shares of both Bezeq and Adgar have risen.
The deal signals Bezeq’s intention to create new growth engines outside the traditional realms of telephony and Internet, by capitalizing on the growing demand for data centers and AI infrastructure.
According to the TASE notification, the venture will operate under a revenue-sharing model. The two companies will share revenue, expenses, and investments equally, with each party expected to invest between NIS 200 million and NIS 250 million from its own internal resources.
Adgar will provide the land, while Bezeq will provide the equipment and handle marketing
Under the division of labor between the companies, Adgar will provide the land and construction in Petah Tikva, and will be responsible for the physical infrastructure and access routes. The company has already secured a binding electricity connection approval from the Israel Electric Corp (IEC) for a capacity of 16 megawatts, and building permits will be issued in the coming weeks. Bezeq will procure the system equipment, lead the technological setup through to commercial launch, and manage the operations and marketing of the data center.
The parties have entered into a 90-day exclusivity period with the aim of signing a detailed agreement. The bulk of the investment in the project will be spread across 2027-2028, with commercial operations scheduled to begin in 2028. Bezeq estimates that as occupancy increases, the facility will generate annual revenue of NIS 50-80 million for the group, along with an operating cash flow of NIS 25-40 million per year.
The site designated for the project is in the Kiryat Arye industrial zone in Petah Tikva, adjacent to Adgar’s offices. Adgar, controlled by the Shnidman family, previously announced plans to develop a 38-floor office tower, four underground basement levels, and a data center. However, due to the slowdown in the income-producing real estate market in recent years, Adgar has decided to focus on the development of the data center. A six-floor office building will be built above it, with 10,000 square meters of leasable space, and 350 parking spaces. These facilities will be built near the company’s offices in Adgar Tower, which is currently fully occupied (comprising 12,800 square meters of leasable space).
Adgar develops, builds and owns income-producing real estate in Israel and abroad (Poland, Belgium, and Canada). Over the past year, the company's stock has fallen by 22% and is currently trading at a market cap of about NIS 695 million.
Published by Globes, Israel business news - en.globes.co.il - on November 5, 2026.
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