Israeli Government Approves Merger of Bezeq With Satellite TV Operator Yes

Tie-up will let telecommunications giant better compete with Hot and other for TV, Internet, telephony business.

Bezeq Israeli Telecommunication Corp. headquarters in Tel Aviv, Israel.
Bloomberg

Israel’s government on Tuesday approved a plan by Bezeq to take full control of satellite TV operator Yes after determining it would not harm competition in the multi-channel TV market.

The approval by Prime Minister Benjamin Netanyahu, acting as communications minister, came after Israel’s cable and satellite TV council said there was no reason to reject the deal, the Communications Ministry said.

Bezeq, once a state-owned monopoly and now Israel’s largest telecoms group, has long sought to merge with Yes to save costs and allow it to combine TV, phone and Internet sales, something cable company Hot – its main competitor and owned by Patrik Dehri’s mulitinational cable group Altice – already does.

Bezeq, already a shareholder, said it would buy the remaining 50.2% of Yes from Eurocom, a closely held company controlled by Shaul and Yosef Elovitch, who also control Bezeq. In February it said the deal was worth up to 1.05 billion shekels ($278 million).

Israel’s antitrust commissioner gave its permission for Bezeq to merge with Yes last year.

In spite of the much anticipated news, Bezeq shares dropped 2% in Tel Aviv Stock Exchange trading Tuesday to finish at 6.74 shekels.

The move comes after the government earlier this year created a wholesale telecoms market that will allow other companies to use Bezeq’s infrastructure. A number of smaller rivals have started providing telecoms services by leasing Bezeq’s DSL lines.

Cellcom Israel, the country’s largest mobile phone operator, in December launched an unlimited video-on-demand package of TV shows, movies and children’s programming for 99 shekels a month, less than half that of Yes and Hot. Last month, it expanded its offering to include landline phone and high-speed home Internet for a 149-169 shekels a month.

In making its case to merge with Yes, Bezeq cited competition, the possible entry of foreign competitors such as Netflix and Apple, as well as a competitive advantage of some rivals who receive international backing.

The ministry said the approval was for a financial merger and that the structural separation between Bezeq and Yes will remain in place for now. The structural separation will be examined separately, it said.