IEC wins approval for telecom entry

Finance Minister Yuval Steinitz on Sunday signed a permit authorizing the Israel Electric Corporation (IEC) to engage in communications activity that will allow it to build a fiber-optic network atop electricity infrastructure.

It represents the final stage of government plan to establish a nationwide fiber-optics network that will allow super-fast Internet download speeds of up to a gigabit (1,000 megabits) per second and as it moves closer to opening up the telecommunications infrastructure to competition.

Most Israeli providers currently offer fast Internet speeds ranging between 5 and 100 megabits per second.

The permit will only go into effect once Energy and Water Minister Uzi Landau signs it.

“This is a significant milestone on the road to building fast Internet infrastructure – among the world’s most advanced – in Israel,” Steinitz said. “This is an important engine of growth that will help strengthen the Israeli economy,” he added.

Israel Electric’s network would compete with incumbent providers Bezeq Israeli Telecommunication Corp. Ltd. and Hot Telecommunication System Ltd.

“In the eyes of the government this represents an important step in generating competition in the fixed-line sector,” Roni Biron, chief analyst at UBS Securities Israel Ltd., said Sunday by phone. “It is a mid- to long-term risk to Bezeq, but execution of the project and its business model remain to be seen.”

A private company will build the NIS 5 billion network in collaboration with the IEC and will use military infrastructure.

Swedish company ViaEuropa, alongside communications- equipment companies in Israel and abroad, submitted an offer for the IEC and Finance Ministry’s tender for private investors.

Deployment of the network is scheduled to start at the end of 2013, the ministry said Sunday.

Bloomberg contributed to this report.