In his last days as communications minister Yoaz Hendel – who was fired on Monday due to political tensions – is pushing through reforms that would force Bezeq to reduce its fixed line rates by 40%.
Billed by media as his "last act" as minister, Hendel said on 14 December that not updating phone rates in 17 years had distorted the market and created an "injustice" for consumers. He proposed a reduction from 50-60 shekels a month to 30-40, saving consumers around US$123 million per year, including VAT.
Hendel has long pushed for reform and yesterday issued a deadline of 4 January 2021 for Bezeq to respond – 20 days at the time of his announcement.
The Ministry of Communications said that analysis it had commissioned indicated "excess profits", with the new tariffs better aligned to the "cost of service".
According to Reuters, Bezeq's share price dropped 10% following the news, while analysts said the tariff reduction could shave 3.6% of total revenues.
For its part Bezeq has said its prices are already low and that is it about to launch a new fibre network, "at a cost of billions of shekels".
A hearing on the matter was held yesterday (15 December), after which Bezeq issued the following statement: "The company is studying the hearing documents and is preparing to submit its response by January 4, 2021. The Company believes that if the proposed changes are implemented it will have a material adverse effect on its financial results."
The proposed tariff amendments are as follows:
| Service | Current Rate | Proposed Rate (Maximum) | ||
VAT excluded | VAT included | VAT excluded | VAT included | |
Monthly charge for regular telephone line | 49.5 | 57.92 | 20.82 | 24.36 |
Rate for call minute to fixed-line networks [1] | Low – 0.035 | Low – 0.041 | 0.012 | 0.014 |
Peak – 0.0857 | Peak – 0.010 | |||
Rate for call minute to mobile networks [2] | 0.1098 | 0.128 | 0.072 | 0.084 |
In his statement Hendel said: "Today we are embarking on a process designed to correct ongoing consumer injustice affecting every home in Israel, in which we are updating the supervised prices of Bezeq's fixed telephony downwards."
Although he noted the use of fixed-line telephony had decreased over the years, Hendel continued to say that two million people still subscribed to services and that use of fixed-line services had increased this year due to Covid-19.
Hendel continued: "The move will reduce the monthly payment of telephone subscribers by about -40% from 50-60 NIS (NIS) on average (including VAT) to 30-40 NIS (NIS) (including VAT) and is expected to reduce the payment that a household pays for the service by hundreds of shekels year. According to the ministry estimate, this is an average annual savings of hundred dollars per household," he added.
Director general of the Ministry of Communications, Liran Avishar Ben-Horin, added: "The tariff update is requested after 17 years and the changes that have taken place in the communications market and technological developments in recent years, and is expected to produce the right balance between company costs and service payments and subscriber payments.
"The update is expected to reduce subscriber payments by hundreds of millions of NIS per year."
