Israel’s largest telecom group, Bezeq, has announced a deal with Generation Capital to form a joint company that will supply electricity to households and businesses across the country. The move is seen as a challenge to the state-owned Israel Electric Corp (IEC), which has dominated the market for decades.
A new era of competition
Bezeq said it entered a non-binding agreement with Generation Capital, a private equity firm that owns Powergen, an energy subsidiary that provides electric power through generation and storage facilities. Bezeq will handle marketing and sales, while Powergen will be responsible for project financing and electricity supply.
The joint company aims to reach a market share of 400,000 household customers and tens of thousands of businesses by the end of 2030, according to a regulatory statement by Bezeq. The company also said it does not plan to make substantial capital investments and has no commitment to minimum quantities of customers.
“Bezeq has a natural potential to be a major player in a sector that is opening up to competition,” said chief financial officer Tobi Fischbein in a letter to investors.
The deal is subject to regulatory approvals and the completion of due diligence.
A changing landscape
For decades, the Israel Electric Corporation (IEC) ran the electricity sector in Israel, but the country has been reforming the sector by opening different segments, from power generation to supply, to new competition. The government hopes to lower electricity prices, increase efficiency, and reduce greenhouse gas emissions by diversifying the energy mix.
Several private companies have already entered the electricity supply market, offering lower rates and green energy options to consumers. Some of them, such as Doral Renewable Energy Resources Group and Enlight Renewable Energy, also operate solar and wind farms in Israel and abroad.
Bezeq, which has been facing increased competition and declining revenues in the telecom sector, sees the electricity market as a new opportunity to leverage its large customer base and operational capabilities. The company also plans to offer bundled services of telecom and electricity to its clients.
The joint venture between Bezeq and Generation Capital is expected to benefit both parties, as well as the Israeli consumers and the environment. Bezeq will be able to diversify its income sources and offer more value to its customers, while Generation Capital will gain access to a wider market and increase its profitability.
Consumers will enjoy more choices and lower prices, as well as the option to switch to renewable energy sources. The environment will also benefit from the reduced reliance on fossil fuels and the increased use of clean energy.
The deal marks a new era of competition and innovation in the Israeli electricity sector, which could lead to a more sustainable and resilient future.
Source: Reuters
