Tech Watch: More mergers in telecom market [pg. 15]

Mergers in the Internet and long distance telephone arena are moving full steam ahead with all five of the leading companies in the market having been involved in deals to consolidate their activities over the last month. Netvision said Sunday it has reached "basic understandings" in its negotiations to buy competitor Barak. The two companies, which are both part of the IDB Group, agreed that Netvision would purchase all of Barak's share capital from Barak shareholders in exchange for 44 percent of Netvision's stock. The negotiations were based on draft valuations for Netvision of between NIS 540 million and NIS 620m. and of NIS 470m. to NIS 540m. for Barak. Netvision and parent company, Discount Investment Corporation, are also in negotiations to incorporate Globcall into Netvision in a buyout from Discount that would value Globcall at between NIS 70m. and NIS 90m. Following the two deals, Globcall, which recently received a government license to offer local telephone service, would make up 7% of Netvision's share capital. Discount, itself a subsidiary of Nochi Dankner's IDB Group, said the mergers were part of a program to create synergy between its communications units and that through these three companies - Netvision, Barak and Globcall - it can offer a full package of Internet, long distance and local calling. Together with its biggest telecom unit Cellcom, Discount is setting itself up to be the main competitor to Bezeq. Bezeq, meanwhile, announced last week that it was exploring the possibility of merging the operations of its Internet and long distance calling subsidiary Bezeq International with Bezeq Call Communications, which offers communications solutions to businesses. All these follow the $84m. purchase by Internet Gold of 60% of 012 Golden Lines last month and the intentions expressed by the last remaining long distance calling provider, XFone 018, to expand into the Internet arena. Amid all this increased competition, Bezeq said Sunday it has won a tender from the Accountant General to set up the data communications network for all government ministries. Bezeq said the contract was worth tens of millions of shekels per year over the three-to-five year life span of the project. Such deals may prove vital to Bezeq in the next few years as it gives up 15% of its market share as part of the government's efforts to open the telecommunications market to competition. And while that effort prohibits Bezeq from offering special deals to entice customers, its biggest competitor, HOT, has presented its new pricing model in an attempt to take its share while the going is good, offering three models for telephone service that gives discounts to customers who also subscribe to its television service. The first, offers free calls within the HOT - 077 network, plus answering service, caller ID, conference calling and four free repair calls for NIS 39 per month for HOT customers with television service and NIS 59 a month for those with just telephone service. Calls to a Bezeq line will cost 9 agorot per minute and those to a cellular network cost 41.09 agorot per minute. The second model for NIS 59 per month (or NIS 79 for just telephone customers) offers 2,000 free minutes for calls to either HOT or Bezeq networks and 12 agorot per minute for calls thereafter. Calls to cellular phones are at the 41.09 agorot per minute rate. The final track called "077 Light" offers calls at 12 agorot per minute to HOT and Bezeq lines and 41.09 agorot per minute to cellular phones, at a cost of NIS 14.90 per month.