Israel securities regulator opens investigation into Bezeq (updated)

Enlight Renewable Energy

20/06/2017 10:40

(Adds Bezeq and analyst comments, details) 
    By Ari Rabinovitch 
    JERUSALEM, June 20 (Reuters) - The Israel Securities 
Authority said on Tuesday it had opened an investigation into 
the country's largest telecom group, Bezeq Israel Telecom 
 BEZQ.TA  and its controlling shareholder. 
    The market regulator said in a statement that the probe 
"deals with suspicions of violations of the securities law and 
the penal code relating to transactions connected to the 
controlling shareholder". It did not elaborate. 
    Trading in Bezeq and its parent companies was halted in Tel 
Aviv following the announcement. 
    The company said it learned of the investigation on Tuesday 
morning and that its offices were searched. 
    "The company does not have any additional information about 
the nature and circumstances of the investigation," it said. 
    Bezeq is controlled by its chairman, Shaul Elovitch, through 
holding company Eurocom Group, which declined to comment.  
    But another Eurocom subsidiary, Internet Gold  IGLD.TA , 
said it was suspending a planned bond issue as a result of the 
investigation. 
    Eurocom gives Elovitch control over a myriad of assets like 
satellite operator Spacecom  SCC.TA  and Enlight Renewable 
Energy  ENLT.TA . He is also a close friend of Prime Minister 
Benjamin Netanyahu, a relationship that bars Netanyahu from 
dealing with all things Bezeq. 
    "A prolonged trading halt is a rather rare procedure which 
requires approval from the Tel Aviv Stock Exchange's chairman 
and cannot exceed one trading day and gives the company a chance 
to provide colour to the market," Barclays analyst Tavy Rosner 
said in a note. 
    Israel's financial news websites reported that investigators 
were focusing on a recent deal in which Bezeq bought control of 
its satellite TV unit from Eurocom. 
    Bezeq has dominated Israel's telecom sector for decades and, 
with a generous dividend policy of distributing all its net 
profit, is a favourite among foreign investors. 
    Looking to shore up its position further, Bezeq is lobbying 
the government to end a forced separation of its fixed-line, 
mobile and satellite TV units.  
    However, opponents say that allowing Bezeq to combine its 
subsidiaries into a single company will stifle competition. 
 
 (Additional reporting by Steven Scheer; editing by Alexander 
Smith) 
 ((ari.rabinovitch@thomsonreuters.com;  +972-2-632-2202; Reuters 
Messaging: ari.rabinovitch@thomsonreuters.com@reuters.net)) 
 
Keywords: BEZEQ INVESTIGATION/