Published:
17-Nov-09
Israel's satellite pay TV operator Yes is set to undergo major ownership changes after a round of stake sales by shareholders centred around major shareholder Bezeq (holder of a 49.6 per cent stake in Yes). Bezeq's parent company is to sell a 30.6 per cent stake in the incumbent telco to Eurocom's 012 Smile, while Smile will divest its 32.6 per cent direct holding in Yes. The shake-up follows an earlier ruling from Israel's Supreme Court which blocked an attempt by Bezeq to increase its stake in Yes, while anti-trust regulators ruled that Bezeq and Eurocom must disband their joint ownership of Yes.
Regulatory approval for the deal is dependent on Eurocom first divesting its stake in Yes, and 012 Smile Communications selling its telecoms business. Ironically, the case against the Bezeq-Yes merger was taken to the Supreme Court by 012 Smile, after the Anti-Trust Authority initially permitted Bezeq to increase its stake in Yes. Previous attempts by Bezeq and Smile to form partnerships with Yes to launch triple-play services have been unfruitful, being blocked by either the regulators or other shareholders.
Our take...
The acquisition of Bezeq by Eurocom has been on the cards for sometime. A number of groups, including mobile operator Partner Communications and cable group HOT, had previously shown interest in buying Eurocom's stake in 012 Smile, a necessary prerequisite for the acquisition to proceed. However, 012 Smile has now been sold for NIS1.2bn ($333m) to Ampal American Israel Corporation which also owns Israel's commercial broadcaster Channel 10. The sale of 012 Smile to Ampal is part of a two-pronged strategy for Eurocom. Firstly it clears the way for Eurocom's acquisition of a direct stake in Bezeq, owner of the country's sole satellite pay TV operator. Secondly, it allows Eurocom to focus on telecommunications services while setting the stage for a long-awaited launch of triple-play services by Yes that will increase direct competition with both Partner Communications' mobile operations and HOT's cable triple-play service. With the partnership between Eurocom and Bezeq in Yes now dismantled, Yes will be able to bundle Bezeq's Internet and telephony offers with its pay TV service.
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