Bezeq shares decline as regulator tightens terms of wholesale market reform
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Bezeq shares decline as regulator tightens terms of wholesale market reform

Telecom firm says implementation of the new terms will harm its financial results, though at this stage it cannot determine how much

Bezeq workers installing fiber optic cables. (Courtesy)
Bezeq workers installing fiber optic cables. (Courtesy)

The Communications Ministry has instructed Bezeq, the nation’s largest operator, to start making its telephone infrastructure available for leasing to competitors in August under the terms of a fully wholesale market.

A wholesale reform in the telephony market, which kicked off at the end of July last year, envisaged Bezeq selling use of its telephone infrastructure to competitors in order to increase competition, at prices set by the ministry. However, a watered down version was implemented for a one-year trial period, after Bezeq opposition to the original plan.

Bezeq said on Wednesday that it was notified by the ministry that the current terms would not be prolonged. The wholesale market requirements set by the ministry are not possible to implement technologically, the company claimed, as they necessitate changing the switching system, making it a complicated and long procedure. The company said it expects it will not be able to meet the timetable set out by the ministry, but is studying the new terms of the reform and will consult with the ministry about them.

Bezeq shares were trading almost 4 percent lower at 2:58 p.m. in Tel Aviv, after the company said that implementation of the new terms will negatively affect its financial results, though at this stage the company cannot determine by how much.

Israel is implementing the wholesale market reform in a bid to make consumer prices cheaper, as Bezeq is one of two companies providing telecom infrastructure but is still its most dominant player. Outlines of the reform were laid out in 2014, but implementation stalled as Bezeq said the wholesale reform in its original version was technologically impossible to implement, leading to the “resale” version that is now being rescinded.

Bezeq executives and its controlling shareholder Shaul Elovitch, who holds a stake in the firm via units of his company, Eurocom Group, have been embroiled in investigations by the Israel Securities Authority and the police into connections between Prime Minister Benjamin Netanyahu, the Communications Ministry, and Elovitch. They all deny wrongdoing. Eurocom holds a stake in Bezeq via Internet Golden Lines and B Communications.

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