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Communications
T
he communications sector worldwide
and in the Israeli economy is charac-
terized by a rapid pace of development
and frequent changes in terms of technology,
in terms of the business structure of the sector
and in terms of regulation. In recent years, an
intensification of competition has been felt in
the communications sector, mainly in the field
of mobile phones (which intensified with the
entry of HOT Mobile and Golan Telecom), while
offering packages including several services, as
well as packages with fixed prices and unlimited
consumption. The intensification of competi-
tion brought about a reduction of prices, higher
mobility of customers, a decline in the amount
of minutes consumed on landline phones,
and higher customer churn-rates. In addition,
implementation of the wholesale market has
intensified competition in the Internet Service
Provider packages section and in the future for
other wholesale services.
If in the past, competition in the communications
sector was concentrated between independent
communications providers in each separate field,
in recent years, there has been a substantial trend
moving to competition between communications
groups operating simultaneously in a number of
fields in the communications sector. Each year,
the cellular and telephony communications com-
panies (which included leading communications
providers in various fields) were ranked by Dun's
100 and following the formation of communica-
tions groups in Israel's communications sector
and themove to competition between the groups,
since 2014 the ranking has been changed to a
"communications groups" ranking and includes
the Market's leading communications groups.
Until March 2015, Bezeq held 49.78% of the
shares in D.B.S. (YES) as well as options war-
rants, which gave it rights to about 8.6%of D.B.S.
shares but which it was prevented from realizing.
After the announcement by the Antitrust Author-
ity that the restriction that had been imposed on
Eurocom Group regarding its holding in D.B.S.
was cancelled, Bezeq realized its option for an
allocation of D.B.S. shares, so that from that mo-
ment Bezeq's percentage of holding in D.B.S.
amounted to about 58.4%. In June 2015, approval
was received from the Minister of Communica-
tions to transfer the means of control in D.B.S. in
a manner so that Bezeq would control D.B.S. full
capital issued and redeemed. After completion of
the acquisition deal, D.B.S. became a fully owned
subsidiary of Bezeq.
In 2015, Israel's communications companies had
total revenue of about NIS 22.3 billion, down 6%
compared with NIS 23.8 billion in 2014.
Bezeq's market share rose to 45% in 2015, com-
pared with 38% in 2014 following the merger
between D.B.S. (YES) and Bezeq. Cellcom main-
tained stability while Partner lost a slight market
share in 2015 (from 19% to 18%) and HOT rose
slightly (from 17% to 18%).
In the communications sector there are com-
petitors that are not part of the communications
groups including Golan Telecom, Xfone, interna-
tional operators, Internet access providers, and
more. In July 2016, Xfone (owned by Hezi Bezalel)
signed a networksharing agreement with Cellcom.
This agreement has paved the way for the entry of
Xfone as the sixthmobile provider in Israel's com-
munications sector. At the same time, theMinistry
of Communications notified Golan Telecom and
Hot Mobile that it was halting the agreement be-
tween them because according to the terms of
Hot Mobile's license, it cannot supply domestic
roaming services to Golan Telecom. Halting the
agreement with HOT Mobile might push forward
the possible sale of Golan Telecom.
Communication Groups
Bezeq
Cellcom
Partner Communication
HOT
*Financial data for 2015, according to revenue turnover.
45%
19%
18%
18%
Field/Group
Bezeq
Cellcom
Partner
HOT
Cellular Telephony
Pelephone
Cellcom
Partner
HOT Mobile
Landline Telephony
Bezeq
Bezeq International
Cellcom
Netvision
Partner
012 Smile
HOT Telcom
Internet Services
(Landline/Cellular)
Bezeq
Pelephone
Bezeq International
Cellcom
Netvision
Partner
012 Smile
HOT Telcom
HOT - Net
International Calls
Bezeq International
Netvision
012 Smile
Hot Mobile
Multichannel TV
D.B.S
1
Cellcom
-
HOT Broadcasts
* From the audited reports of Bezeq in 2014
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2016
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Communications