Ministry of Finance and Economy and Industry Moshe Kahlon (Kulanu) is barred from handling matters pertaining to communications company Hot Telecommunication Systems Ltd. (TASE: HOT.B1) and its competitors, because his sister is VP human resources in the company. This ostensibly means that only the professional staff in the Ministry of Finance can take part in discussions about communications infrastructure reform or opening sports broadcasting to competition. A "Globes" probe, however, indicates that Kahlon is indirectly involved through his office head and right hand Nadav Sheinberger.
Sheinberger, who was Kulanu's head of public relations in the most recent election campaign, entered all the Knesset Economic Affairs Committee discussions in recent weeks on the main reforms affecting HOT Communications and its competitors. Sheinberger was seen and photographed by us holding talks in the committee meeting room and outside it with both committee chairman MK Eitan Cabel (Zionist Union) and communications company lobbyists.
Yesterday, for example, Sheinberger spoke with Moshe Bibi, HOT Communications' regular lobbyist, who works in the Goren Amir Group lobbying firm. This happened during the Economic Affairs Committee's decisive discussion on communications infrastructure reform, in which HOT was eventually allowed to use Bezeq's landline infrastructure.
Last week, Sheinberger held a whispered conversation with Policy lobbying firm co-CEO Tamar Abramovich, who among other things represents Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL). Cellcom wants the reform to enable it to purchase sports content from providers such as Charlton, who up until now have had exclusive agreements with HOT Communications and Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) subsidiary DBS Satellite Services (1998) Ltd. (YES).
Instead of requiring the providers to sell content without restrictions at the market price or according to a mechanism to be determined by the regulator in advance, Ministry of Finance director general Shai Babad (also personally appointed by Kahlon) proposed a compromise in which the obligation to sell will follow three months of negotiations, instead of being immediate. Ultimately, the politicians (the Ministers of Finance and Communications), together with the Economic Affairs Committee, will determined the pricing mechanism. Opponents of this compromise include not only Cabel, but also the Ministry of Finance budget department, i.e. the professionals.
It should be added that Sheinberger entered many discussions in the Knesset Finance and Economic Affairs Committee not pertaining to communications. Knesset and communications market sources believe, however, that in matters in which Kahlon is barred from involvement, the rule should also apply to the head of his office.
The purpose of the communications infrastructure reform was mostly to enable small and medium-sized providers lacking physical infrastructure of channels and pipelines to use Bezeq's infrastructure, and to lay fiber optics cables in them that would belong to those suppliers. HOT Communications, however, also saw an opportunity, and asked for the greatest possible concessions in access to its major competitor's infrastructure. The committee approved the reform, but ruled that HOT Communications could use Bezeq's infrastructure only if it pays a special price for it to be calculated in retrospect.
Published by Globes [online], Israel business news - www.globes-online.com - on December 7, 2016
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