JERUSALEM (Reuters) - Bezeq Israel Telecom said on Sunday it had received notice that Israel’s telecoms regulator would likely allow Bezeq to merge its various business units.

Bezeq, Israel’s dominant telecoms operator, had long argued for an end to its “structural separation”, in which it is forced to keep its mobile phone, fixed line, satellite TV and internet units as separate entities.

Permitting an end to structural separation would ultimately allow Bezeq to offer packages of phone, internet and TV. Its smaller competitors, many of which are barely making profit, have urged the regulator to keep the structural separation in tact, arguing that Bezeq will become more powerful.

The Communications Ministry, Bezeq said, hinges on Bezeq’s commitment to invest in infrastructure and accelerate the deployment of a fiber optics broadband network in 2017 and reach 76 percent of households within three years.

Before amending Bezeq’s license, the ministry intends to hold a hearing during 2017 regarding the procedures of the cancellation of the structural separation.

Bezeq said it was examining the prospect of implementing measures to allow it to merge its units. </s> In a move that could save Bezeq hundreds of millions of shekels over the next eight years, the Communications Ministry has said it will let the company take the first steps toward merging its business units.

But the decision, which Bezeq reported to the Tel Aviv Stock Exchange on Friday, is still subject to public hearings and is likely to be opposed by both its rivals and the treasury, who contend that Israel’s dominant telecommunications company hasn’t done enough to ensure effective competition in the communications industry.

“This move has the potential of significantly undermining competition in the communications market, certainly if it is undertaken now, before conditions for acting have been met,” treasury budget chief Amir levi said in a letter om Sunday.

Bezeq has been lobbying hard to end the so-called “structural separation” imposed on it in the 1990s as a way to give other companies the chance to compete against it in the then-emerging internet segment.

Since then, the company has had to operate its core landline telephone business, as well as its Pelephone cellular unit, Yes satellite television and internet operations, as separate entities, adding costs and preventing it from offering packages of phone, internet and TV, as its rivals do.

The decision by the Communications Ministry won’t bring a complete end to structural separation at Bezeq. The proposal calls for an interim arrangement, under which Bezeq will be allowed to operate legally and financially as a single company while management and operations of the different units remain separated by Chinese walls.

But the interim measure would give Bezeq one critical benefit: The parent company would be entitled to use the accumulated losses at Yes, amounting to 5.5 billion shekels ($1.4 billion) against future taxes. Under a preliminary agreement reached with the Israel Tax Authority in September, Bezeq agreed it would pay a 462 million-shekel tax bill after purchasing full control of Yes, but would then be able to use Yes’ losses against future taxes over the next eight years.

That works out to as much as 1.3 billion shekels, or an average of 41 million shekels a quarter. Shares of Bezeq finished 4.6% higher at 7.10 shekels in TASE trading on Sunday in heavy trading.

Bezeq said the Communications Ministry decision is conditional on its investing in infrastructure and accelerating deployment of a fiber optics broadband network to 76% of all Israeli households within three years.

Bezeq sources said they expected the hearings over structural separation to be completed by the end of the first quarter next year, but the company will almost certainly face a fight.

Media and advocacy groups are wary about the warm relationship between Prime Minister Benjamin Netanyahu, who is also the communications minister, and Shaul Elovitch, Bezeq’s controlling shareholder. Netanyahu has recused himself from Bezeq-related issues, but the ministry’s director general is a Netanyahu confidante and Regional Affairs Minister Tzahi Hanegbi handles Bezeq.

The timing of the announcement over the weekend and at the end of the year has also raised suspicions. Although the Finance Ministry did not issue a formal statement, treasury officials reacted angrily to the Communications Ministry’s decision and said it would not be approved as formulated.

State Comptroller Joseph Shapira had urged the Communications Ministry to desist from acting on the structural separation issue until he had completed his report on the Bezeq monopoly. On Sunday, the Movement for Quality of Government added its voice to the opponents.

“Making the decision right now, without any justifiable reason to act so quickly and while the State Comptroller is preparing a wide-ranging and relevant report on the landline communications market, is a decision not based on facts, as it should be, and raises questions about the dubious reasons that stand behind it,” the organization said. </s> Israeli operator Bezeq is poised to sell its wholesale satellite company Spacecom to a Chinese investor, according to space specialists.

 

 The company has been on the market for at least three years, but the price is believed to have dropped after its latest satellite, Amos 6, was lost in a SpaceX launcher failure in September.

 

 But reports in the past few days say Beijing Xinwei Technology is close to completing its purchase of the operation, through Xinwei’s subsidiary, Luxembourg Space Telecommunications, based in the European grand duchy.

 

 The original price was believed to be $285 million, but reports say Xinwei has been able to knock a third off in order to complete the deal.

 

 Spacecom’s satellites cover the Middle East, central and eastern Europe and parts of North America. Bezeq owns Spacecom through its subsidiary Eurocom. </s> RIYADH (Reuters) - Saudi Arabia will lift a ban on internet phone calls, a government spokesman said, part of efforts to attract more business to the country.

A woman using an iPhone visits the 27th Janadriya festival on the outskirts of Riyadh in this February 13, 2012 file photo. REUTERS/Fahad Shadeed/Files

All online voice and video call services such as Microsoft’s Skype and Facebook’s WhatsApp that satisfy regulatory requirements will become accessible at midnight (2100 GMT), Adel Abu Hameed, spokesman for the telecoms regulator CITC said on Twitter on Wednesday.

The policy reversal represents part of the Saudi government’s broad reforms to diversify the economy partly in response to low oil prices, which have hit the country’s finances.

“Digital transformation is one of the key kick-starters for the Saudi economy, as it will incentivise the growth of internet-based businesses, especially in the media and entertainment industries,” a statement from the information ministry said.

“Access to VoIP (voice over internet protocol) will reduce operational costs and spur digital entrepreneurship – that’s why it is such an important step in the Kingdom’s internet regulation,” it said.

Saudi Arabia - which introduced the ban in 2013 - and its Gulf Arab neighbours have been wary of secure internet communication, which experts say is harder to monitor, especially by activists and militants.

Gulf Arab states, except the island kingdom of Bahrain, were mostly spared the “Arab Spring” mass protests often organised over the Internet which roiled much of the region in 2011.

Lifting the ban could squeeze Saudi Arabia’s three main telecoms operators - Saudi Telecom Co (STC), Etihad Etisalat (Mobily) and Zain Saudi - which earn revenue from international phone and text calls made by the millions of expatriates living in Saudi Arabia.

Iyad Ghulam, senior analyst at Riyadh’s NCB Capital, said due to the policy change, telecoms operators could be looking at a revenue loss of six to seven percent on international calls alone, but that would be at least partially mitigated by higher demand for data.

“This move is basically telling these companies: You have to move on. Stop protecting your voice segment and move on,” he said.

How these companies respond could generate some changes in market share, he said.

The Saudi authorities will continue to regulate the Internet to restrict content that violates the country’s laws such as extremist material, pornography and gambling sites, the information ministry said.
Bezeq, an Israeli telecoms company, says that it has received word from the country's telecoms regulator that it will be allowed to end the "structural separation" of its business operations by product (i.e. mobile phone, internet, land lines).