Would-be bidders call for clarity on IEC telecoms venture issues

29 Feb 2012

Companies considering submitting a final bid to act as an investor for the telecommunications venture that will operate over infrastructure owned by the Israel Electric Corporation (IEC) are reportedly dismayed with the tender committee responses to calls for clarification on a number of issues. According to Globes Online, with would-be bidders now having just two weeks to submit binding bids, it is understood that most remain dissatisfied with answers provided to questions regarding the current condition of the country’s telecoms sector and the lack of a clear policy needed for formulating a business plan for the IEC venture. Specifically, the report claims that bidders are keen to learn whether the government will set price controls on infrastructure owned by fixed line incumbent Bezeq. Another area of interest is thought to be whether the Ministry of Communications (MoC) will allow local mobile operators such as Cellcom and Partner Communications to own small stakes in the IEC venture. It has been suggested that a commitment by the two aforementioned cellcos to use the new infrastructure is key, as without them it has been claimed there will be no customers to take up services over the IEC network. Partner and Cellcom, the report claims, have said that without price controls they will not participate in the venture. The tenders committee did reportedly agree to amend clauses relating to the venture’s deployment, such as interim deployments, while it also agreed to lower the costs of IEC employees who work for the venture.

In light of the development, and with suggestions that a number of potential bidders may opt not to take part in the tender as a result of the lack of clarification in some areas, it has been suggested that the process could be delayed by several months.

As noted in TeleGeography’s GlobalComms Database, IEC was granted a trial licence allowing it to conduct trials of telecoms services over its fibre-optic network in February 2010, with a pilot scheme in Kiryat Shmona which included around 150 households. Subsequently, in October 2011 the Hayek Committee, which had been tasked with examining the country’s telecoms sectors, called for considerable importance to be attributed to pressing forward with the set-up of a telecommunications company which would operate over IEC’s infrastructure, and swift to act on the recommendations, just a few days after the working group had submitted its recommendations, the Israeli government announced that it was seeking an investor to help build a 25,000km fibre-optic network that would bring ultra high speed internet to Israel and increase competition; registration to participate in the process, which is expected to last six months, opened on 10 October 2011.

Israel, Cellcom, Israel Electric Corporation (IEC), Ministry of Communications, Partner Communications Company