An international comparison presented by Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) on the basis of an economic study prepared by Analysys Mason shows enormous gaps between the prices set by the Ministry of Communications for the of Bezeq Israeli Telecommunication Co. Ltd.'s (TASE: BEZQ) telephony and prices in countries allowing a similar sale of telephony services by the local telecommunications company and its competitors.
Partner was responding to the hearing published by the Ministry of Communications and the prices set in the hearing for the use of Bezeq's telephony services by its competitors. The Ministry of Communications set a 40% discount on the price of the existing packages, which Bezeq has accepted, but Partner and Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) strongly oppose this price, and are demanding a return to the original price set by the Ministry of Communications in the framework of the broadband reform.
According to Partner, the international comparison shows that the resale service prices of telephony services are tens and hundreds of times the prices of comparable services in all the comparison countries. For example, for the 100 minutes package proposed in the Ministry of Communications hearing, the price is 803% to 2507% higher than the price in the comparison countries. The price for the 1,000 minutes package proposed in the hearing is 81% to 422% higher than the price in the comparison countries.
Partner asserts that the prices proposed in the hearing are also much higher than the prices set in the past by the Ministry of Communications for wholesale telephony services (the original prices set, which Bezeq is contesting in the Supreme Court, and which Bezeq's competitors are demanding implementation of). These prices set for wholesale telephony services are 72% lower than the resale prices proposed in the hearing, and the corresponding original per call minute price set is 42% lower than the per call minute price proposed in the hearing.
According to Partner, there is no reason to change the existing format and prices for wholesale telephony services; they should simply be enforced. Partner says that in the framework of the hearing, the Ministry of Communications is proposing to change the format for telephony services to resale, to postpone the date for complete provision of wholesale telephony, and to set a price for the resale services many times the wholesale telephony price.
Partner asserts that this decision, if accepted, will have unbearable results. "The offender is rewarded - instead of imposing the obligation on Bezeq, the Ministry of Communications is choosing to give the company a prize by multiplying the price many times over, thereby making the service unprofitable for the providers, and by postponing the implementation date for the complete wholesale telephony product. This arrangement harms the service providers. The resale service prices proposed in the hearing will make the wholesale telephony product unprofitable, and do not leave any profit margin for the service providers."
Partner also states, "The consumers will also lose, because they will not get an offer constituting a competitive alternative to Bezeq's product, and Bezeq's monopolistic dominance of the market will become greater. We therefore believe that there is no reason to implement the arrangements proposed at the hearing. Instead, the Ministry of Communications should simply implement the existing arrangements for wholesale telephony and take action to impose them on Bezeq immediately."
Following the Ministry of Communications' plan to eliminate the structural separation in Bezeq completely, instead of gradually, Partner is attacking the Ministry of Communications and calling the measure a complete failure of the reform in the landline market. According to Partner, the 2012 policy document was designed to facilitate agreement implementation of a wholesale market arrangement in Israel. This entire document was based on the principle of an agreed wholesale market according to a predefined process of implementation stages.
Published by Globes [online], Israel business news - www.globes-online.com - on January 13, 2016
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