Internet Gold Falls on Government Moves: Israel Overnight

Internet Gold-Golden Lines Ltd. (IGLD) led the first slump in four weeks of Israeli stocks listed in the U.S. on speculation government regulation of the phone operator controlled by the company will erode profit.

Shares of Internet Gold lost 17 percent to $5.80 in New York last week, the lowest level since 2009. The Bloomberg Israel-US Equity Index (ISRA25BN) of the biggest Israeli companies traded in the New York fell 0.2 percent in the four-day week to 89.62, the first drop since the week ended March 9. Allot Communications Ltd. (ALLT)’s premium over Tel Aviv-traded shares ballooned to the widest in three weeks after the network gear maker received a new order. Internet Gold dropped 2.8 percent at the close in Tel Aviv today to 21.01 shekels, or the equivalent of $5.62, while Allot advanced 8.5 percent.

Bezeq Israeli Telecommunication Corp. (BEZQ), Israel’s largest fixed-line phone company which is controlled by Internet Gold, will be prevented from collecting connection charges from service providers by the Ministry of Communications, local newspaper Calcalist reported on April 4. In the wake of protests against the rising cost of living, the government is forcing telecommunication providers to cut fees and encouraging new players into the market, where the three biggest companies control 95 percent of sales.

Internet Gold and Bezeq, which slumped 0.9 percent on April 5 in Tel Aviv, are tumbling “because of continued uncertainty regarding the policies of the Ministry of Communications,” Gilad Alper, a senior analyst at Excellence Nessuah Investment House Ltd. in Ramat Gan, Israel, said by phone last week. “The best thing that can happen is that we actually get some clarity on what the Ministry of Communications wants to do. When we know what the policies are, then we can judge what the impact is.”

A decision will be made on the connection charges after the Passover holiday that started Friday, Yechiel Shabi, a spokesman for the ministry, said by phone on April 4.

Allot Order

Allot, based in Hod Hasharon Israel, advanced to 90.10 shekels, or the equivalent of $24.09, in Tel Aviv today. The U.S. shares gained 8 percent to $24.31 on April 5, or a $2.11 premium over the Tel Aviv shares that was the largest on the Bloomberg Israel-US Equity Index.

Allot won an initial order worth about $4 million to supply equipment to a Latin American fixed-line and mobile operator, according to a company statement on April 5.

U.S. stock gauges retreated last week as rising yields for Spanish debt revived concerns that Europe’s debt crisis may weigh on global growth and as minutes from the U.S. Federal Reserve’s latest policy meeting damped expectations for more monetary stimulus. The Nasdaq Composite Index (CCMP) fell 0.4 percent while Israel’s benchmark TA-25 (TA-25) rose 1.8 percent in the week. The TA-25 declined 0.7 percent today.

Israel, whose population of 7.8 million is similar in size to Switzerland’s, has about 60 companies traded on the Nasdaq Stock Market, the most of any country outside the U.S. after China. The nation is also home to more startup companies per capita than the U.S.

Mobile Competitors

Cellcom Israel Ltd. (CEL), the nation’s largest mobile-phone company, lost 2.9 percent to 44.68 shekels, or the equivalent of $11.95 in Tel Aviv today, after rising 0.4 percent in the U.S. on April 5 to $12.23.

Partner Communications Co. (PTNR), the second-largest mobile-phone operator, retreated 1.3 percent to 27.14 shekels, or the equivalent of $7.26, in Tel Aviv, after rising 1.8 percent to $7.36 in the U.S. on April 5.

Internet Gold is based in Petach Tikva, Israel. Its B Communications Ltd. unit owns 31 percent of Bezeq.

To compete in the mobile-services market, Yakum, Israel- based Hot Telecommunication System Ltd., which provides cable television services, acquired MIRS Communication Ltd. last year. Golan Telecom Ltd., an Israeli phone company, entered into a national roaming agreement with Cellcom to use its mobile network.

They join Rami Levi Chain Stores Hashikma Marketing 2006 Ltd. and Alon Holdings Blue Square Israel Ltd. (BSI), virtual service operators who got licenses from the government, in offering potentially cheaper mobile phone services.

Alvarion, Given

Alvarion Ltd. (ALVR), the Tel Aviv-based maker of wireless communication equipment, fell 30 percent to 64 cents on April 5, a record low. The company cut its first-quarter revenue forecast and said it will be in default on a financial covenant, according to a statement dated April 5. The Tel Aviv shares plunged 11 percent today to 2.545 shekels, or the equivalent of 68 cents, extending a slump of 18 percent on April 5.

Given Imaging Ltd. (GIVN), the maker of pill-sized cameras for digestive diagnosis, declined 3 percent today to 72.76 shekels, or the equivalent of $19.45 in Tel Aviv. They rose 1.6 percent to $19.68 in New York on April 5. The Yokneam, Israel-based company was rated buy in an initial coverage by Alastair Mackay, an analyst at GARP Research & Securities Co.

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net;

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