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After a month of articles about the Great Efficiency Drive at Bezeq - job cuts, retirement schemes, cutbacks, and negotiations between the management and union representatives, the company finally filed its financial statement for 2003.

As promised, Bezeq presented a tremendous loss of NIS 440 million for the fourth quarter, which shifted it to an NIS 438 million loss for the year. So be it; the company had spent much of the last month preparing us for that flood of red ink. That is the cost of the Great Efficiency Drive; courageous managers have to sacrifice short-term profits for the long term, it explained.

Indeed, the executive review tells a tale of one-time charges, based mainly on increased provisioning for its expanded early retirement program, which, as Bezeq's PR agents have been drumming into our heads for years, is a code word for Efficiency.

But at Bezeq, as always, the real story lies in the notes. They may be written in tedious legalese, but without wading through them, you can't understand what the company is about.

Note 16(d) presents the following paragraph: "On March 18, 2004, an amendment was signed to the retirement agreement between the company, the New Histadrut and the labor representatives, addressing certain corrections to the retirement agreement. It was agreed, inter alia, that by September 2004, 400 people would retire, and it was agreed that the pension terms of the [veteran - GR] workers accepting retirement under the retirement agreement of September 2000 would remain in force, despite the pension amendments, and that the company will bear all additional costs deriving therefrom. Based on calculations of an external actuary, the management estimates the company will be expensing an additional NIS 420 million due to the above. A charge was accordingly booked in the 2003 financial statement."

Get it? No? Don't blush, Bezeq habitually goes out of its way to obfuscate the details of its retirement schemes.

The story is actually dead simple. Bezeq's elephantine loss in the fourth quarter had nothing to do with efficiency. As we speculated here two weeks ago, while the press raved about the Great Efficiency Drive at the national phone company, the real deal behind the loss was the management's decision to exempt its workers from the pension reform.

Still don't get it? After the reform, all Israel's veteran workers have to pay more and settle for less when they retire - and at a later age at that.

Wait a mo. Not so, not all. No suckers they, Bezeq's workers have unique pension arrangements. They get to retire at age 48 with a fat package worth millions of shekels. Even when the pension reform was being legislated, it was clear as day that they'd evade it somehow.

They did, too, hence that NIS 420 million charge Bezeq booked. It isn't for efficiency, it's the cost of the management decision to finance an exemption for the Bezeq people from the pension reform.

As usual, the financial statement spreads a smokescreen not only around the retirement plan, but around Bezeq's subsidiaries too.

Last summer, Shlomo Liran - the CEO of the Yes satellite TV broadcaster - announced that he'd cured the company, stabilized it, he'd won and could now start a brand new career far far away in Sweden.

The notes to the financial statements of Bezeq and Yes are a work of art. We won't torment you with a verbatim translation, they are too long. We shall just point out a few interesting aspects.

* The opinion of Yes's accountants, Kesselman & Kesselman PwC, substantially differs from that of Bezeq's accountants regarding Yes.

* In one place in its financial statement, Bezeq writes that Yes's management says the approved budget will suffice for its needs. In another place, Bezeq admits that based on an economic analysis, Yes will need significantly more money than envisioned by the approved budget for the company.

* Even after devoting hours to Bezeq's financial statements, we failed to understand whether the banks are infusing their share of financing to Yes per the original agreement, or whether Bezeq is financing the satellite venture by itself.

It is apparently no coincidence that Bezeq stopped reporting on the implementation of the Yes financing agreement several quarters ago. What we did understand is that Shlomo Liran quit right on time, not a second too late.

And let's have a taste of Pelephone Communications for dessert. It broke into the black in 2003, netting NIS 24 million.

It is hard to divine the nature of that profit, because Pelephone doesn't publish financial statements replete with informative notes. What we can say is that Deutsche Bank recently upped its evaluation of Pelephone from $650-850 million to $950 million-$1.15 billion. And the company waxed happy.

This is a good place to mention the blatantly obvious. Pelephone Communications was Israel's first cellular provider. It was launched 18 years ago. Only a decade later came Cellcom and three years after that, Partner Communications.

Cellcom today is estimated at about $2 billion, while Partner is thought to be worth $1.5 billion - and Pelephone gets a mere billion.

What, didn't Pelephone generate enough value over the years?

That isn't it, exactly. It generated value hand over fist, just not for its shareholders. Its suppliers, its workers and the rest of the people feeding off the company's plate lived high off the hog all those 18 years. And Pelephone learned that practice from its mama, a cash cow whose monopolistic cream has flowed all these years to the people clever enough to fasten onto its udder, and hang on for dear life.