A split is emerging in the board of Israeli fiber-optics venture Israel Broadband Company (IBC) between the Israeli partners on the one hand and Israel Electric Corporation (IEC) and Swedish investor Jonas Birgersson on the other, in the wake of Birgersson and IEC's decision to appoint Doron Cohen, formerly director-general of the Ministry of Finance, as chairman of the venture in place of Ze'ev Goldberg. The Israeli partners, headed by Zvi Marom, controlling shareholder of BATM Advanced Communications Ltd. (LSE: BVC) and a shareholder in the venture, have announced that they will forcefully oppose the move imposed on them and carried out without consultation with them.
Last week, the Israeli partners received notice that it had been decided to oust Goldberg and replace him with Cohen. Goldberg was the investment banker for ViaEuropa in the deal whereby the latter became the controlling shareholder in the venture. After the deal was completed, Goldberg was asked to become chairman. He agreed, and even moved to Israel for the purpose.
It is not clear why Birgersson decided to replace Goldberg with Cohen, but it is clear that the main mover behind the decision was IEC and its chairman Yiftah Ron-Tal. Birgersson's agreement to the appointment of Doron Cohen is an indicator of the balance of forces in the venture and of the fact that it is really run by IEC and not by the shareholders.
IEC holds 40% of the venture, and is the main contractor, and ViaEuropa and the Israeli investors 60%.
In recent months, "Globes" has several times exposed tensions between the Israeli partners and ViaEuropa, chiefly over Birgersson's role and the venture's slow progress. The venture is failing to meet the expectations of those involved, including the state, which expected to see IEC take the fiber-optic market by storm and present a genuine alternative to Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ). In fact, what is happening is that IEC is doing what it wants with the venture, and it is proceeding very slowly.
Zvi Marom says that the Israeli shareholders are demanding that the choice of chairman should be coordinated with them and should be made in a fair and transparent manner for the benefit of the venture. Marom says he will oppose the appointment and will not allow a culture of political appointments to infiltrate the fiber-optics venture, which is supposed to turn Israel digital by connecting all homes to a fiber-optic infrastructure.
Published by Globes [online], Israel business news - www.globes-online.com - on January 25, 2015
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