Bezeq Israeli Telecommunication Corp. (BEZQ) was set for the biggest decline in a month amid investor concern Israel’s largest land-line operator will struggle to cope with competition as its chief executive resigns.
Bezeq shares dropped 2.3 percent to 4.242 shekels at 2:20 p.m. in Tel Aviv, headed for the biggest decline since Dec. 24 on 64 percent of the three-month average daily volume. B Communications Ltd. (BCOM), which owns a 31 percent stake in Bezeq, lost 5.2 percent to 15.13 shekels. Bezeq’s shares were the fourth-biggest decliners today on the benchmark TA-25 Index (TA-25), which dropped 1.1 percent to 1,194.47, the most since Jan. 3.
Chief Executive Officer Avraham Gabbay, who has been in his post since November 2007, will leave on July 17, Bezeq said today in a regulator filing. The company, which also offers mobile-phone services through its unit Pelephone Communications Ltd., is facing increased competition as the government allows new entrants into the market.
Gabbay’s departure “is a painful blow to the company, as we stand at the start of a challenging period in which Bezeq will have to cope with rising competition and stronger regulation,” Ori Licht, head of research at I.B.I-Israel Brokerage & Investments in Tel Aviv, said today in an e-mailed note.
A possible candidate for CEO is Stella Handler, Licht said. Handler, chairwoman of Hot Telecommunication System Ltd., will resign her position at the end of January, according to a company statement to the Tel-Aviv Stock Exchange on Jan. 9. Bezeq has already changed its new chief financial officer, naming Dudu Mizrahi, in October after the resignation of Alan Gelman.
Bezeq’s shares have been the third-worst performer in the TA-25 benchmark index in the past 12 months, dropping 37 percent, after Cellcom Israel Ltd. (CEL:US) and Partner Communications (PTNR), the country’s largest mobile-phone providers. Hot and Golan Telecom entered the wireless market in May leading to greater price competition. Bezeq provides mobile phone services via its Pelephone Communications Ltd. unit.
Bezeq is also set to face competition in the fixed-line market as the Israel Electric Corp. sets up a fiber-to-the-home network. The state-owned utility said Dec. 26 that it got a consortium bid for the network.
Internet Gold-Golden Lines Ltd. (IGLD), which has a stake in Bezeq via B Communications, dropped 3.6 percent to 11.15 shekels.
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