Israel Post to be fully privatized

Israel Post branch   credit: Shutterstock
Israel Post branch credit: Shutterstock

Initially, 40% of the shares in Israel Postal Company will be offered on the Tel Aviv Stock Exchange.

Minister of Communications Yoaz Hendel has declared that Israel Postal Company will be 100% privatized, with 40% of the shares in the company initially being floated on the Tel Aviv Stock Exchange. The decision comes against a background of understandings already reached with the postal workers, although it was not mentioned how the workers will be compensated in the event of full privatization.

Hendel announced that 100% of the state's holding in the company will be sold. The decision follows a series of discussions with Ministry of Communications officials and with the Ministry of Finance, in which the Government Companies Authority also participated. Officials see full privatization as the long-term solution to the structural problems at Israel Postal Company and to deficiencies in postal services to the public.

The privatization plan agreed between Hendel and Minister of Finance Avigdor Liberman calls for an initial offering of 40% of the shares in Israel Postal Company on the Tel Aviv Stock Exchange. At the same time, the state will promote full privatization through a sale of the remaining shares either privately or in a public offering, or through some combination of the two. A private sale of 100% of the company will be considered if the public offering does not prove feasible.

A sale of the balance of the shares to private investors will require an injection of hundreds of millions of shekels for severance pay.

"Ever since I took up my post, I have been warned not to touch Israel Post. One after another, ministers of communications have avoided touching this hot potato," Hendel said. "Today, we are setting out on a new path in the postal services market in Israel. We're opening it up to competition, cutting regulation, and introducing a historic reform at Israel Postal Company. The letters market is steadily fading, and the parcels market is growing, and within this reality we are introducing a major change today that will inaugurate a new era of high quality, efficient and advanced mail services for Israel's citizens. We shall act sensibly and in cooperation with the dedicated workers."

Process started in 2018

In 2018, the state began a process of selling 20% of the shares in Israel Postal Company to a private investor. The Ministry of Communications believes that this model will not achieve the goal, and that as long as the state remains the controlling shareholder in the company, it will have to inject hundreds of millions of shekels every few years to maintain the company's activity.

At the same time as executing the privatization plan, the Ministry of Communications and the Ministry of Finance will act to revise regulation applying to the postal services market and to Israel Postal Company, in the framework of the amendment to the Postal Law currently under discussion in the Knesset Economic Affairs Committee. The proposed reform includes expanding competition in mail services, incentives for switching to digital services, changes to the method of price control, reduced regulation, and higher fines for license breaches.

According to the valuation carried out when privatization was decided on, Israel Postal Company is worth some NIS 1.2 billion.

Published by Globes, Israel business news - - on December 30, 2021.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.

Israel Post branch   credit: Shutterstock
Israel Post branch credit: Shutterstock
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