globes 3-3-2013
Bezeq: Interconnect fee cut won’t materially affect results
The reduction in the telephony interconnect fee was the last reform launched by outgoing Communications Minister Moshe Kahlon.
On Thursday, the Ministry of Communications announced that it plans to slash the telephony interconnect fee to a uniform maximum of NIS 0.0104 per minute, from the current fee of NIS 0.0421 at peak hours and NIS 0.0232 at non-peak hours (excluding VAT). Bezeq said that the change would reduce its revenue from interconnect fees, but that it would be offset by reduced expenses by the company and its subsidiaries.
Bezeq added that the effect of the decision on the company’s results would depend when it comes into effect, if at all.
Bezeq will not be affected by the reduction because its wholly-owned mobile and ISP subsidiaries, Pelephone Communications Ltd. and Bezeq International Ltd., respectively, will benefit from the measure, offsetting the reduction in revenue to Bezeq’s telephony business. The reduction is expected to cost Bezeq a few tens of millions of shekels in revenue.
The Ministry of Communications gave Bezeq and the other telephony carriers 60 days to respond to the hearing. The reduction in telephony interconnect fees will affect all landline networks, including those of Bezeq and Hot Telecommunication Systems Ltd. (TASE: HOT.B1).
The fee contemplated by the ministry – NIS 0.0104 per minute – reflects the cost of providing the service, but not the fixed costs of providing a telephone line or extra payment for peak hours. The Ministry of Communications believes that a cost-based interconnect fee will greatly contribute to competition in the telephony market, improve the competitiveness of new and small carriers, and benefit consumers.
Published by Globes [online], Israel business news – www.globes-online.com – on March 3, 2013
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