JERUSALEM (Reuters) - Bezeq Israel Telecom said on Sunday it had received notice that Israel’s telecoms regulator would likely allow Bezeq to merge its various business units.

Bezeq, Israel’s dominant telecoms operator, had long argued for an end to its “structural separation”, in which it is forced to keep its mobile phone, fixed line, satellite TV and internet units as separate entities.

Permitting an end to structural separation would ultimately allow Bezeq to offer packages of phone, internet and TV. Its smaller competitors, many of which are barely making profit, have urged the regulator to keep the structural separation in tact, arguing that Bezeq will become more powerful.

The Communications Ministry, Bezeq said, hinges on Bezeq’s commitment to invest in infrastructure and accelerate the deployment of a fiber optics broadband network in 2017 and reach 76 percent of households within three years.

Before amending Bezeq’s license, the ministry intends to hold a hearing during 2017 regarding the procedures of the cancellation of the structural separation.

Bezeq said it was examining the prospect of implementing measures to allow it to merge its units. </s> In a move that could save Bezeq hundreds of millions of shekels over the next eight years, the Communications Ministry has said it will let the company take the first steps toward merging its business units.

But the decision, which Bezeq reported to the Tel Aviv Stock Exchange on Friday, is still subject to public hearings and is likely to be opposed by both its rivals and the treasury, who contend that Israel’s dominant telecommunications company hasn’t done enough to ensure effective competition in the communications industry.

“This move has the potential of significantly undermining competition in the communications market, certainly if it is undertaken now, before conditions for acting have been met,” treasury budget chief Amir levi said in a letter om Sunday.

Bezeq has been lobbying hard to end the so-called “structural separation” imposed on it in the 1990s as a way to give other companies the chance to compete against it in the then-emerging internet segment.

Since then, the company has had to operate its core landline telephone business, as well as its Pelephone cellular unit, Yes satellite television and internet operations, as separate entities, adding costs and preventing it from offering packages of phone, internet and TV, as its rivals do.

The decision by the Communications Ministry won’t bring a complete end to structural separation at Bezeq. The proposal calls for an interim arrangement, under which Bezeq will be allowed to operate legally and financially as a single company while management and operations of the different units remain separated by Chinese walls.

But the interim measure would give Bezeq one critical benefit: The parent company would be entitled to use the accumulated losses at Yes, amounting to 5.5 billion shekels ($1.4 billion) against future taxes. Under a preliminary agreement reached with the Israel Tax Authority in September, Bezeq agreed it would pay a 462 million-shekel tax bill after purchasing full control of Yes, but would then be able to use Yes’ losses against future taxes over the next eight years.

That works out to as much as 1.3 billion shekels, or an average of 41 million shekels a quarter. Shares of Bezeq finished 4.6% higher at 7.10 shekels in TASE trading on Sunday in heavy trading.

Bezeq said the Communications Ministry decision is conditional on its investing in infrastructure and accelerating deployment of a fiber optics broadband network to 76% of all Israeli households within three years.

Bezeq sources said they expected the hearings over structural separation to be completed by the end of the first quarter next year, but the company will almost certainly face a fight.

Media and advocacy groups are wary about the warm relationship between Prime Minister Benjamin Netanyahu, who is also the communications minister, and Shaul Elovitch, Bezeq’s controlling shareholder. Netanyahu has recused himself from Bezeq-related issues, but the ministry’s director general is a Netanyahu confidante and Regional Affairs Minister Tzahi Hanegbi handles Bezeq.

The timing of the announcement over the weekend and at the end of the year has also raised suspicions. Although the Finance Ministry did not issue a formal statement, treasury officials reacted angrily to the Communications Ministry’s decision and said it would not be approved as formulated.

State Comptroller Joseph Shapira had urged the Communications Ministry to desist from acting on the structural separation issue until he had completed his report on the Bezeq monopoly. On Sunday, the Movement for Quality of Government added its voice to the opponents.

“Making the decision right now, without any justifiable reason to act so quickly and while the State Comptroller is preparing a wide-ranging and relevant report on the landline communications market, is a decision not based on facts, as it should be, and raises questions about the dubious reasons that stand behind it,” the organization said. </s> Israeli operator Bezeq is poised to sell its wholesale satellite company Spacecom to a Chinese investor, according to space specialists.

 

 The company has been on the market for at least three years, but the price is believed to have dropped after its latest satellite, Amos 6, was lost in a SpaceX launcher failure in September.

 

 But reports in the past few days say Beijing Xinwei Technology is close to completing its purchase of the operation, through Xinwei’s subsidiary, Luxembourg Space Telecommunications, based in the European grand duchy.

 

 The original price was believed to be $285 million, but reports say Xinwei has been able to knock a third off in order to complete the deal.

 

 Spacecom’s satellites cover the Middle East, central and eastern Europe and parts of North America. Bezeq owns Spacecom through its subsidiary Eurocom. </s> RIYADH (Reuters) - Saudi Arabia will lift a ban on internet phone calls, a government spokesman said, part of efforts to attract more business to the country.

A woman using an iPhone visits the 27th Janadriya festival on the outskirts of Riyadh in this February 13, 2012 file photo. REUTERS/Fahad Shadeed/Files

All online voice and video call services such as Microsoft’s Skype and Facebook’s WhatsApp that satisfy regulatory requirements will become accessible at midnight (2100 GMT), Adel Abu Hameed, spokesman for the telecoms regulator CITC said on Twitter on Wednesday.

The policy reversal represents part of the Saudi government’s broad reforms to diversify the economy partly in response to low oil prices, which have hit the country’s finances.

“Digital transformation is one of the key kick-starters for the Saudi economy, as it will incentivise the growth of internet-based businesses, especially in the media and entertainment industries,” a statement from the information ministry said.

“Access to VoIP (voice over internet protocol) will reduce operational costs and spur digital entrepreneurship – that’s why it is such an important step in the Kingdom’s internet regulation,” it said.

Saudi Arabia - which introduced the ban in 2013 - and its Gulf Arab neighbours have been wary of secure internet communication, which experts say is harder to monitor, especially by activists and militants.

Gulf Arab states, except the island kingdom of Bahrain, were mostly spared the “Arab Spring” mass protests often organised over the Internet which roiled much of the region in 2011.

Lifting the ban could squeeze Saudi Arabia’s three main telecoms operators - Saudi Telecom Co (STC), Etihad Etisalat (Mobily) and Zain Saudi - which earn revenue from international phone and text calls made by the millions of expatriates living in Saudi Arabia.

Iyad Ghulam, senior analyst at Riyadh’s NCB Capital, said due to the policy change, telecoms operators could be looking at a revenue loss of six to seven percent on international calls alone, but that would be at least partially mitigated by higher demand for data.

“This move is basically telling these companies: You have to move on. Stop protecting your voice segment and move on,” he said.

How these companies respond could generate some changes in market share, he said.

The Saudi authorities will continue to regulate the Internet to restrict content that violates the country’s laws such as extremist material, pornography and gambling sites, the information ministry said. </s> Riyadh: The Saudi government is lifting a ban on calls made through online apps on Thursday but will monitor and censor them, a government spokesman said.

All online voice and video call services—such as Microsoft’s Skype, Facebook’s WhatsApp and Messenger, and Rakuten’s Viber—that satisfy regulatory requirements were set to become accessible overnight.

However, on Thursday morning, Viber appeared to remain blocked inside the kingdom, and WhatsApp worked only when connected to a wireless network.

Adel Abu Hameed, spokesman for telecoms regulator CITC, said on Arabiya TV on Wednesday that new regulations were aimed mainly at protecting users’ personal information and blocking content that violated the kingdom’s laws.

Asked if the apps could be monitored by the authorities or companies, he said: “Under no circumstances can the user use an application for video or voice calling without monitoring and censorship by the communications and information technology commission, whether the application is global or local.”

It was unclear how the authorities can monitor apps such as WhatsApp, which says its messages are supported by end-to-end encryption, meaning the company cannot read customers’ messages even if approached by law enforcement agencies.

Saudi Arabia, which introduced blocks to internet communications from 2013, has along with its Gulf Arab neighbours been wary that such services could be used by activists and militants.

Gulf Arab states, except the island kingdom of Bahrain, were mostly spared the Arab Spring mass protests, often organized over the internet, that roiled much of the region in 2011.

Lifting the ban represents part of the Saudi government’s broad reforms to diversify the economy, partly in response to low oil prices, which have hit the country’s finances.

Yet the policy reversal could squeeze Saudi Arabia’s three main telecoms operators—Saudi Telecom Co. (STC), Etihad Etisalat (Mobily) and Zain Saudi—which earn revenue from international phone calls made by the millions of expatriates living in the kingdom. Reuters </s> A Saudi man uses his mobile to take pictures during Janadriyah Culture Festival on the outskirts of Riyadh, Saudi Arabia February 8, 2016. REUTERS/Faisal Al Nasser

RIYADH (Reuters) - Saudi Arabia will remove its ban on internet phone calls on Thursday, a government spokesman said, in a bid to stimulate online business as the kingdom looks to boost non-oil revenue.

All online voice and video call services such as Microsoft's Skype and Facebook's WhatsApp that satisfy regulatory requirements will become accessible at midnight (2100 GMT), Adel Abu Hameed, spokesman for the telecoms regulator CITC said on Twitter on Wednesday.

The lifting of the ban could pinch Saudi Arabia's three main telecoms operators - Saudi Telecom Co (STC), Etihad Etisalat (Mobily) and Zain Saudi - which earn substantial revenue from international phone and text calls made by the millions of expatriates living in the kingdom.

The policy reversal comes as part of the government's broad reform programme to diversify revenue sources as oil prices have hit the finances of the world's top exporter.

"Digital transformation is one of the key kick-starters for the Saudi economy, as it will incentivize the growth of internet-based businesses, especially in the media and entertainment industries," a separate statement from the information ministry said.

"Access to VoIP (voice over internet protocol) will reduce operational costs and spur digital entrepreneurship – that's why it is such an important step in the Kingdom's internet regulation," it said.

The kingdom and its Gulf Arab neighbours have been concerned by the use of secure internet communication - which experts say is harder to monitor - especially by activists and militants.

Gulf Arab states, except the island kingdom of Bahrain, were mostly spared the "Arab Spring" mass protests often organised over the Internet which roiled much of the region in 2011.

They avoided the civil wars which largely followed but face deadly bombing attacks by Islamic State and militancy by fringes of their Shi'ite Muslim populations they say is fuelled by Iran.

The authorities will continue to regulate the Internet in order to restrict content that violates the kingdom's laws such as extremist material, pornography and gambling sites, the information ministry added. </s> In a first official on-record statement implicating him in the so-called Case 4000 corruption investigation, Prime Minister Benjamin Netanyahu was named Tuesday as one of the people believed to have been involved in bribery as part of an illicit deal with the communications giant Bezeq.

Speaking at a hearing in which Shaul Elovitch and Nir Hefetz — the majority shareholder of Bezeq and a former media adviser for the prime minister, respectively — appealed their continued detention in the case, state prosecutor Yehudit Tirosh of the Israel Securities Authority said that in his role as communications minister, Netanyahu was at the center of “a very grave instance of giving and taking bribes.”

The case involves suspicions that Elovitch ordered the Walla news site, which he owns, to grant positive coverage to Netanyahu and his family in exchange for the prime minister advancing regulations benefiting Elovitch.

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Tirosh, arguing before the Tel Aviv Magistrate’s Court, said that “positive coverage is a mild way of putting it.”

“I have no way of properly describing the benefit [he received]. We are talking about enlisting a leading news site to provide adulating coverage in return for regulatory benefits given by the Communications Ministry, the minister of communications and the director-general of the Communications Ministry,” she said.

Netanyahu served as communications minister from November 2014 to February 2017. During that time, Walla’s coverage notably changed to favor the Netanyahu family, and Bezeq was given permission, among other things, to buy the satellite cable provider Yes, overriding antitrust issues, and to renege on its commitment to lease out its infrastructure to telecom competitors so they could provide competing fixed line and internet services.

Suspended Communications Ministry director Shlomo Filber, who turned state witness last week and is expected to provide information possibly incriminating Netanyahu in the probe, had his remand extended by 15 days last Wednesday.

Sources close to Netanyahu, who himself has denied any wrongdoing in the case, rejected claims that the prime minister had sought to help Bezeq as part of a quid pro quo deal.

“The claims against Prime Minister Netanyahu are baseless. All of the decisions were made for relevant reasons and are based on professional opinions, committees and legal advice,” the sources said on Monday.

Tirosh, repeating comments she made at a Monday hearing, said the benefits given to Bezeq were worth “up to a billion shekels ($290 million).”

On Monday, the court released to house arrest four suspects in the case — Elovitch’s wife, Iris; his son, Or; Bezeq CEO Stella Handler; and Bezeq’s deputy CEO for business development, Amikam Shorer — but acceded to a request from the prosecution to keep Elovitch and Hefetz in custody until Sunday.

Arguing Tuesday against overturning that ruling, Tirosh said the state believed that Elovitch and Hefetz would try to obstruct the investigation, even possibly suggesting illicit consultation with Netanyahu himself.

“There is a real suspicion that if the suspects are released today, hugely important investigative work that needs to be carried out in the coming days will be thwarted,” she said.

Netanyahu is expected to be questioned in the case on Friday, “possibly” even under caution as a criminal suspect, a source familiar with the investigation told The Times of Israel earlier this week. If Hefetz and Elovitch were released before then, they could speak with the prime minister before he faces police investigators.

On Sunday, Channel 10 reported that Hefetz and Elovitch had coordinated their version of events and deleted incriminating messages that allegedly linked the favorable coverage Netanyahu received on the Walla news site to the policies that benefited Bezeq.

“We are talking about a real evidence-based suspicion of instances of obstructing the investigation by these two suspects,” Tirosh said in an apparent reference to allegations made in the report.

Elovitch’s and Hefetz’s lawyers argued that leaked text messages between a judge and one of the investigators in the case, appearing to show the two coordinating remand rulings before hearings were even held, invalidated the state’s bid to hold them in custody. A full transcript of the messages released on Monday, however, appeared to be less damning than initially reported — when only a snippet was available — showing that judge Ronit Poznansky-Katz and prosecutor Eran Shacham-Shavit were mainly discussing case logistics.

“We cannot overstate the seriousness of the incident that took place on Sunday,” Yaron Kostelich, Hefetz’s lawyer, told the court, arguing that it deligitmized the prosecution request to remand his client. “We have never seen anything like this is the State of Israel.”

In response, Tirosh, who replaced Shacham-Shavit after the incident, described the incident as “very serious in my eyes, and in the eyes of the state, even after further messages were released,” but said it should not affect the case.

“To say that we are talking about an unlawful detention or that we are talking about damaging the justice process is an exaggeration, especially as the incident is still being clarified,” she said. </s> JERUSALEM (AP) — An Israeli court on Monday released four of seven suspects held in a high-profile corruption case involving Prime Minister Benjamin Netanyahu’s inner circle, amid an uproar over a judge apparently discussing their detention with an investigator in private.

Israeli media reported late Sunday that Tel Aviv Magistrate Court Judge Ronit Poznanski-Katz and securities investigator Eran Shaham-Shavit exchanged text messages discussing extending the detention of several suspects in the investigation involving Israel’s telecom giant Bezeq and the close confidants of Netanyahu. Poznanski-Katz was removed from the case after critics decried the exchange as an obstruction of justice, and Netanyahu backers pounced on it as part of their claim that the authorities were out to get the long-time premier.

Last week police arrested seven suspects for their alleged involvement in the promotion of regulation worth hundreds of millions of dollars to Israel’s Bezeq telecom company in return for Bezeq’s popular news site, Walla, allegedly providing favorable coverage of Netanyahu and his family.

Former Netanyahu media adviser Nir Hefetz and Shlomo Filber, the former director of the Communications Ministry under Netanyahu, were arrested, as well as Bezeq boss Shaul Elovitch, his son and his wife and two top Bezeq executives. Hefetz, Filber and Elovitch remain in custody.

Filber, one of the closest people to Netanyahu, has reportedly turned state witness and will incriminate Netanyahu in the affair.

But the sense of peril to Netanyahu’s rule took a step back Sunday, with the evening news report Sunday about the illicit conversation. Shortly after, the head of the Tel Aviv Magistrate Court removed Poznanski-Katz from the case, and the justice minister and Supreme Court president jointly requested an investigation into the report. Netanyahu allies are calling for a criminal investigation into possible breach of trust and obstruction of justice by the judge and prosecutor.

The defense attorneys for the suspects in the case demanded their immediate release. On Monday, the Tel Aviv court ordered Elovitch’s son released from custody, and released Elovitch’s wife and the two Bezeq executives to house arrest.

The judge and prosecutor’s exchange on the WhatsApp messaging service appeared to play into Netanyahu’s claims that police investigations into his alleged corruption were part of a witch hunt by the media and law enforcement. Coalition whip David Amsalem, a member of Netanyahu’s ruling Likud party, told Israel’s Army Radio on Monday that the police were “obsessively” chasing after the prime minister and called for an investigation into the justice system.

Netanyahu is not directly implicated in the Bezeq corruption case, also known as Case 4000, but is expected to be questioned by police on the matter later this week. Police have recommended indicting Netanyahu on corruption charges in two other cases, one involving accepting gifts from billionaire friends, and the second over trading positive media coverage for advantageous legislation for a newspaper.

The prime minister has denied any wrongdoing. </s> In the CITC spokesman's words, the ban is being lifted to make way for more business over the internet:

This decision comes in line with the recent trends in the ICT sector; the reliance on data revenues (Internet delivery) and added services is the global trend that operators in the Kingdom should take. He added that the Authority is working with all stakeholders to provide all the telecom subscribers in the Kingdom of the finest services that meet their aspirations and satisfy their needs.

Saudi Arabia originally introduced the ban in 2013 out of wariness for services like WhatsApp and Skype, which have secure communications protocols that are difficult to externally monitor, according to Reuters. Lifting the ban will make it easier for people and businesses to operate, but it will also likely end up cutting into profits of the country's three telecoms (Saudi Telecom Co, Mobily and Zain) which were the only providers of international phone and data calls while the ban was in place.
Bezeq, an Israeli telecoms company, says that it has received word from the country's telecoms regulator that it will be allowed to end the "structural separation" of its business operations by product (i.e. mobile phone, internet, land lines).