Bezeq to be sold to local businessman for NIS 7b

Bezeq, the domestic telecommunications behemoth, is slated to be sold in the coming days in what will be one of the largest deals in Israel's history.

Under the emerging deal, businessman Shaul Elovitch will buy a controlling stake in Bezeq - 30.7 percent of its shares - for NIS 7 billion. The sellers, Bezeq's current controlling shareholders, are businessmen Haim Saban and Mori Arkin and the British private equity fund Apax Partners.

An outline of the deal was tentatively agreed to on Wednesday night, but has not yet been finalized. If it goes through, however, it will be the largest purchase ever made in Israel by a local businessman.

It will also net Bezeq's current owners a pretax profit of over 300 percent on their original investment. Saban, Arkin and Apax bought Bezeq from the state in October 2005, and since then have extracted NIS 7.9 billion in dividends from the company, including NIS 2.6 billion that went straight into their own pockets.

Additionally, Bezeq's share price is now 2.24 times higher than it was then, giving them a pretax capital gain of NIS 4.9 billion.

Most of that profit - NIS 2.21 billion apiece - will go to Saban and Apax. Arkin's holding is much smaller, so his share will come to only NIS 490 million.

The high price Elovitch is expected to pay reflects Bezeq's enormous profitability in recent years. It thus reinforces the widespread assessment that there is relatively little competition in Israel's communications market - something that negatively affects consumers every day.

Elovitch currently owns a stake in several other communications companies, including the satellite television broadcaster Yes; Eurocom-Nokia; the Internet service provider and long-distance telephone company 012 Smile; and Spacecom Satellite Communications, which operates the Amos communications satellites. He will have to sell all these holdings in exchange for the Antitrust Authority's permission to buy Bezeq.

If the sale does go through, Israel's communications industry will effectively be controlled solely by Israeli shareholders.

The sale would also divest Saban, the Los Angeles-based media tycoon, of his last investment in Israel: He sold his stake in Keshet, the Channel 2 television franchisee, last year.

However, as far as is known, Saban is not deliberately trying to sever his business ties with Israel. Rather, market insiders say, he seems to have been motivated solely by the opportunity to rake in a hefty profit.