Privatization pressed forward
Israel’s minister of communication, Binyamin Ben-Eliezer, is reportedly about to approve regulations that will open the local telecommunications market to competition on November 1. Senior ministry officials have said that, while Ben-Eliezer is determined to go ahead with the plan, he has yet to make a final decision on when it will be announced.
The regulations were first brought before the Knesset Economics Committee in mid-May, and Ben-Eliezer was expected to sign them following. However that was postponed in the face of a threat posed by the workers’ union at Bezeq—the country’s telecommunications monopoly—to strike, if the approval of the new regulations was not preceded by a privatization arrangement signed between the ministry and Bezeq. Reportedly, the labor union warned the minister of an "all-out war" if he went ahead with signing the regulations at that time.
Intensive negotiations between the finance ministry, Bezeq management and the company’s labor union ran into on August 16, over the union’s demand that the government guarantee Bezeq’s financial ability to meet the cost of workers’ retirement arrangements. The union also is demanding that the government relieve the company of constraints hindering its competitiveness, which had been put into place to allow other companies entry into the telecommunications sector.
Last week, the workers unexpectedly received support from Prime Minister Ehud Barak, who ordered the signing of the regulations be delayed until a ministerial privatization committee would be convened. In insisting on pressing forward Bezeq’s privatization prior to the opening of the communications market, the company is given extra-time to improve its competitive stand.
Coming out of the meeting Thursday night, Barak stated that the committee had decided to sell off as soon as possible the government's 55 percent stake in Bezeq. The company, whose international and cellular networks are fully open to competition, still enjoys a monopoly in the domestic market.
The Israeli communications sector has undergone considerable changes in the past several years, with deregulation and privatization being phased in, at a time it was undergoing a technological revolution. As a result, Bezeq the communications giant now feels under threat from a potential coalition of financially inferior rivals, in the form of Israel’s cable television companies.
During the 52 years that the state monopolized local telecommunication services, a national connectivity rate of 2.82 million telephone lines was achieved—almost one line to every two citizens.
Reporting last week to the company’s directorate, Bezeq presented a net profit of NIS 108 million for the second quarter of the year 2000. This was 14 percent higher than the amount reported for the first quarter, and 50 percent higher than the net profit of the corresponding period in 1999. — (Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)
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