Bezeq may face rocky future

Executive departures could prove costly, analysts say.

By MATTHEW KRIEGER
October 11, 2007 22:39
2 minute read.
bezeq logo 88

bezeq logo 88. (photo credit: )

The future of Bezeq Ltd. was unclear Thursday after Israel's largest telecommunications company saw four of its senior executives resign, including Chief Financial Officer Ran Oz, this week. "It's never good for a company to lose so many senior executives in one week,"said Ori Licht, a telecom analyst at Israel Brokerage and Investments Ltd. "We don't know why Ran Oz left the company, but he came to Bezeq from Nice where he did an excellent job, and Bezeq was expecting him to help turn the company around, but that didn't really happen." Bezeq denied that the management shake-up was affecting the company. "In telecommunications companies, to have senior executives leave is very normal but this caught our eye because it all happened this week, a Bezeq representative told The Jerusalem Post. "This is a very natural progression and the company will be fine ... We are still talking to and meeting with investors and daily operations at the company are continuing as normal." On Wednesday, two vice presidents resigned on the heels of Tuesday's resignation of Oz and Nissim Alafiya, head of Bezeq's business department. This week's upheaval only adds to what already has been a turbulent year for the company. In April, Bezeq's chief executive officer Yacov Gelbard resigned after an external audit found "procedural and fundamental flaws" in the management of the company. Gelbard was temporarily replaced by Deputy Chief Executive Officer Ika Abravanel, and then by Avi Gabay, who was named acting CEO in June. Under Gelbard's command, options and bonuses awarded to top executives were not approved through appropriate channels and the company didn't write off outdated equipment worth NIS 317 million in a timely manner, external auditor Yoram Danziger said in a report released in late April. In July, chairman Dov Weissglas stepped down as part of the fallout from the findings of the audit. He was replaced by Shlomo Rodav, the former chairman and chief executive officer of Gilat Satellite Networks Ltd. Bozhena Ganzelman, a telecom analyst at Psagot Ofek wasn't concerned about the management upheaval. "The new CEO brought his own team with him - this happens with many companies around Israel and we see this all the time," she said. What did worry Ganzelman are difficulties the company faces in competing with other telecom companies due to regulations enforced by the Communications Ministry. "We expect the company to lose some subscribers because they can't offer the same services such as HOT's Triple-Play, but it will still be a big company," she said. Tzahi Avraham, an analyst at Clal Finance Batucha, however, said Oz was supposed to present investors with a plan regarding the future of the company, but that this never happened. "As far as the recovery of the company is concerned, the management team hasn't yet been stabilized and we need the new CFO to start running the business properly. The company has a lot of work to do and the CFO needs to establish a synergy between its different parts," Avraham said. Bloomberg contributed to this report.


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