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Thousands of internet service provider (ISP) subscribers have contacted HOT Telecommunication Systems Ltd. (TASE: HOT) since it announced its new 100-Mbps internet access service for NIS 20 per month last week. Large ISPs report a wave of cancellations of their service; one ISP says that its churn rate has quadrupled.
The ISPs are so far refusing to copy HOT's package, prompting subscribers to quit them. It remains to be seen how long the ISPs will be able to absorb such a high churn rate, because the price involves heavy losses, possibly to the point of collapse.
The ISPs are pressing the Ministry of Communications to stop HOT's package to no avail, as Minister of Communications Moshe Kahlon refuses to intervene. The ISPs showed the ministry figures that clearly show that HOT is cross-subsidizing its services and that its campaign is killing them.
The Ministry of Communications' professional staff apparently has no response to HOT's move, but not because they can't intervene, but because Kahlon does not want to, preferring that HOT continue its campaign.
On Friday, HOT launched a new package deal, offering unlimited landline and mobile telephony services, internet infrastructure, and cable television (including HOT's HD Plus service) at NIS 329 per month. Subscribers can get 100 Mpbs internet access for another NIS 20 per month through HOT.net. No other telecommunications company currently has a comparable package.
HOT's share price rose 2.5% by mid-afternoon to NIS 44.50, giving a market cap of NIS 3.4 billion.
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