HOT Stock Buyback Sparks Price Jump

HOT shares have lost about 40% of their value over the past year.

In a move that may ultimately presage the end of public trading in HOT Telecommunication Systems, the company's board has approved the buyback of up to NIS 184 million in HOT's own stock, the firm announced Thursday. NIS 125 million of the sum is earmarked for an offer to purchase stock held by the public, at NIS 38 per share, which is 17% higher than Wednesday's close but just 9% higher than Thursday's close, NIS 34.77, after the stock rose over 7% in trading Thursday.

The company appears to be taking advantage of its relatively low trading price. HOT shares have lost about 40% of their value over the past year. The buyback would amount to 5% of the firm's current shareholder capital, assuming that the company completes the buyback at the proposed price, rendering the shares dormant.

Following such a change, Patrick Drahi, who controls HOT through privately-held Cool Holdings, is expected to have a stake of over 68% in HOT Telecommunication (the public company ), compared to his current 65% ownership.

In another potential development related to the company, two analysts at IBI Investment House, Erez Mor and Ori Licht, predicted a couple of weeks ago that HOT is close to losing its spot in the blue-chip Tel Aviv 25 index to EZchip, the semiconductor firm, following the decline in HOT's market cap. EZchip would be the third tech company in the benchmark index.