Bezeq signed a long-term agreement (IRU) with Partner for the supply of fiber optic infrastructure. According to the agreement, Partner will be able to use Bezeq’s 120,000 fiber optic lines at a rate of 1 gigabyte, for a period of 15 years, starting this January.
The right to use the lines will be given in 5 equal annual pulses, meaning 24 thousand lines per year, starting on January 1, 2023. The total consideration to be paid by Partner to Bezeq is approximately NIS 574 million plus VAT for the first period of the agreement, which will be divided into five equal payments ( in accordance with the dates of the pulses), to be paid at the beginning of each calendar year of the years 2023 to 2027. In addition, the company will pay annual maintenance fees at a rate of 4% of the proceeds. The terms of the deal include a mechanism for spreading payments as well as linking mechanisms. Also, the partner has the option of bringing forward dates both regarding the right of use in the lines and regarding the payment in the garden.
The agreement will allow the partner to be the provider of fiber services with the widest deployment in Israel, so that it can offer service to the greatest number of households in the country, even in places where it is not expected to reach with its independent fiber infrastructure, thus strengthening competition in these areas for the benefit of consumers. Partner will be able to significantly increase the number of the company’s fiber subscribers, which according to the latest report stands at approximately 277,000 customers – the highest number in the market, out of approximately 929,000 households reached by Partner Fiber’s infrastructure.
The IRU agreement (irrevocable self-use right) was signed for a fixed period of 15 years, with an extension option for two additional periods of 5 years each (for a total of 25 years), with lower line costs than in the first agreement period. In addition, the company was given an option to purchase the right to use 48 thousand additional lines, under the same conditions, during the first period of the agreement. Also, the agreement contains a mechanism for upgrading the rates of the lines.
IRU agreements are very accepted in the world of telecom, and in Israel a similar agreement was signed by the IBC company with other communication providers. Such an agreement generates investment savings and efficiency, while immediately increasing the coverage areas and shortening the “time to market” of additional providers. It is a move of voluntary regulation that increases competition, by lowering the cost of infrastructure investment, created by market forces and negotiations between companies, without regulatory intervention.
CEO of the Partner Group, Avi Gabai: “The transaction gives Partner the possibility to reach faster with optical fibers to our television and internet customers in general. The current transaction is the second phase of Partner’s fiber strategy, where the first phase focused on the rapid and initial deployment and the goal of the second phase is to reach every household in Israel.
Following the signing of the agreement, Bezeq Group Chairman Gil Sharon said, “The IRU agreement we signed with Partner will bring consumer welfare in the form of greater competition, both in terms of price and service, and will enable accelerated growth of fiber penetration and customer connection across the country. For Bezeq, it provides greater certainty in the use of its fiber network.”
Sharon also added, “The Ministry of Communications as a policy outline, and the companies as the executing agency, will meet the task of extensive deployment of optical fibers, while competing between 3 infrastructures. As of today, the rate of deployment of fiber in Israel is very high compared internationally. The rate of access to fiber will reach by the end of the year 2022 to 70% of households, and by the end of 2024 the rate of access to fiber will be close to 100%. The IRU agreement makes it easier for the service provider to market fiber connections, and will enable improved offers to customers, when the competition in the provision of fiber connection services will increase. The deal we signed has A balance between a price that is lower than today’s wholesale market price, and the amount of connections that will increase and with it the utilization and efficiency of the network, and it reflects Bezeq’s proactive approach to leading business moves that will ensure increased use of its fiber network over time.”