The cable television companies reportedly have plans to dismiss some 1,200-1,500 employees, around one-third of their total workforce, during the second half of 2007. However, HOT Telecom, the communications provider owned and operated by the country's three cable TV operators - Golden Channels, Matav and Tevel - issued a response denying the report.

HOT is delaying the cutbacks in order to bring its level of customer service closer to that of its rival, satellite TV provider YES. The funding arrangements for the cable companies are expected to be completed by early December, which will help HOT to prepare for the streamlining measures.

In contrast to Bezeq, which must negotiate with a strong and experienced trade union, the cable companies' employees are not organized and therefore will probably not be able to obtain severance pay beyond the usual terms offered. Most of the dismissals are expected to come from the customer service and financial divisions.

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Based on average monthly salaries of NIS 6,000, the cutbacks are expected to save about NIS 85 million in operating costs, or 23 percent of the companies' estimated operating costs for 2006. This is expected to give the companies an operating profit by 2008, one year earlier than expected.

The three companies employ about 4,000 workers in all. Most of the savings from the efficiency measures are expected to come from combining service centers and increasing the companies' administrative efficiency.

TheMarker recently published a report on preparations to merge the companies' broadcasting, distribution and billing systems, in addition to streamlining their purchasing and investment activities for a savings of about NIS 800 million.

In 2007, the companies will focus their efforts on providing cable telephone services as well as solidifying their 63-percent market share in the country's multichannel market. They hope to cross the 400,000-customer market line for telephony subscribers by the end of 2007. That number is currently at 150,000.

One potential obstacle from the companies' perspective is the decision by the Ministry of Communications to require the companies to implement a structural separation similar to that imposed on Bezeq. This will require the companies to create a separate communications company, to establish a clear separation between the business, financial and marketing management divisions, to separate the companies' assets and to separate the workforce. These measures will work against the efficiency targets set by the companies.

There have also been reports that cable companies' shareholder Yitzhak Tshuva is planning to wrest control from his fellow Matav shareholders in preparation for a second attempt to merge the cable firms with wireless phone provider Partner.

The strategic streamlining plan could also spark additional similar thoughts in the corridors of power of the cable companies. Partner is known to have one of the largest and best service divisions in the communications industry, and merging the three companies with it is sure to have many advantages.