Matav Cable gains Partner

16 Mar 2004

Partner Communications, Israel’s second largest wireless operator which operates under the Orange brandname, has paid USD137 million for a 40% stake in Matav Cable Systems. Conditions of the deal include Matav distributing its 5% stake in Partner as a dividend to shareholders. On completion of the deal Matav’s existing shareholders Delek and Dankner’s stakes in Matav will be diluted to 12% each. Matav itself is poised to purchase rival cableco Tevel, which is currently operating under receivership with debts of USD600 million. Partner’s acquisition of the Matav stake is contingent on a successful deal with Tevel. If both deals are pulled off, Partner will become the second largest telecommunications company in Israel, behind only former incumbent Bezeq. Local analysts have further predicted that Israel’s third cable company Golden Channels will join the Matav/Tevel alliance in the near future, in a move which has been under discussion since the start of 2002. Thus far a tie up between the cable companies has been hindered by the trio’s combined debts of over USD1 billion. Under Bank of Israel regulations, banks may not issue credit to a single company in excess of 30% of its equity; without Partner the companies would have hit this threshold.

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