Communications Minister Gilad Erdan has decided to cut the

fixed-line connectivity fee to NIS 0.099.

Minister of Communications Gilad Erdan has accepted the recommendation of the Ministry of Communications’ expert committee to cut the fixed-line connectivity fee to NIS 0.099. He rejected the arguments of the infrastructure companies Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and Hot Telecommunication Systems Ltd. (TASE: HOT.B1), which wanted a higher fee, and he also rejected the arguments of the carriers Cellcom Israel Ltd.(NYSE:CEL; TASE:CEL) and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), which wanted a lower fee.

The reduction in the fixed-line connectivity fee will have a far smaller effect that the reduction in mobile connectivity fees, and will have very little impact of Bezeq and Hot. The connectivity fee is the fee paid by one customer for use of another customer’s network for a telephone call to him or her. The current fee averages NIS 0.04 and will be cut to NIS 0.099.

Most plans currently offered in the telecommunications market have packages of telephone call minutes at a fixed charge, and the users will not feel any material change from the reduction in the connectivity fee. It is believed that Bezeq and Hot will absorb most of the damage from the reduction in the connectivity fee, amounting to tens of millions of shekels a year, and the main beneficiaries will be the mobile carriers, which will pay less for calls to fixed-line numbers.