After yesterday's unanimous approval of the telecommunications reform advocated by the Ministry of Finance included in the Economic Arrangements Bill, the Ministry of Communications is today threatening to scuttle the measure. The Ministry of Communications opposes one of the reforms included in the bill designed to bolster competition in communications infrastructure.
The disputed measure allows all the companies in the sector to use the pipes through which Bezeq Israeli Telecommunication Co. Ltd.'s (TASE: BEZQ) fiber-optic lines pass to provide communications to consumers, thereby bolstering competition in the sector. The Ministry of Communications opposes this; the official reason is that there is already an arrangement through which Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) and Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) can use Bezeq's channels as part of the wholesale market reform.
The Ministry of Finance asserts that although this plan is already being partially implemented, Bezeq is now creating difficulties for Cellcom and Partner in certain cases, and in any case, the arrangement in the Economic Arrangements Bill will also allow Hot Telecommunication Systems Ltd. (TASE: HOT.B1) and IBC (the fiber-optic venture) to use this infrastructure.
In advance of today's cabinet meeting scheduled to discuss the clauses of the Economic Arrangements Bill, the Ministry of Communications took a more aggressive line, severely criticizing the measure and saying that the measure was belligerent, improper, and unacceptable in cabinet working relations. The Ministry of Communications alleges that the Ministry of Finance's proposal will interfere with the deployment plan, without promoting investment or competition, saying that it supports its own initiatives, but will not go along if the Ministry of Finance insists on ending cooperation and using legislation to enforce its will.
In other words, the Ministry of Communications is now threatening that if the infrastructure reform is not removed from the agenda, it will oppose the other reforms in the sector included in the Economic Arrangements Bill designed to increase competition with Bezeq-owned DBS Satellite Services (1998) Ltd. (YES) and HOT in multi-channel TV, privatization of Idan Plus, the obligation to sell sports broadcasts, and the possibility of free online broadcast channels.
Behind these arguments concerning the infrastructure reform, designed to damage Bezeq, are the relations between Prime Minister and Minister of Communications Benjamin Netanyahu and Bezeq controlling shareholder Shaul Elovitch. Attorney General Avichai Mandelblit ruled two months ago that Netanyahu could not be involved in matters concerning Bezeq because of the social relations between the two men, and Tzachi Hanegbi was recently appointed minister for Bezeq affairs in the Ministry of Communications for this reason.
Some are nevertheless alleging that Ministry of Communications director general Shlomo Filber is looking after the interests of Elovitch and Bezeq, and that this should be taken into account in assessing the Ministry of Communications' recent action. Meanwhile, at least, Hanegbi, who took up his post only recently, is supporting Filber's views in the matter.
Published by Globes [online], Israel business news - www.globes-online.com - on August 11, 2016
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