Groups of foreign investors will be able to bid for Bezeq, with or without Israeli investors; this planned reform in the tender will be debated by the cabinet soon.

The change was decided on in a meeting of the director-generals in charge of the company's privatization, due to the lack of candidates for the acquisition. The purpose of the change was to enable as many investors to consider the matter. If adopted, the change will allow foreign investors considering buying into Bezeq, to act quickly and secretly without having to form a joint venture with Israeli organizations.

According to the basic terms determined by the government, to submit a purchase offer a group must include at least 20% Israeli investors and 20% foreign investors. According to the terms of the tender announced in November of 2001, the groups must submit their candidacy no later than February 13 2002.

An examination by the Ministry of Communications and the Government Companies Authority revealed that so far not one group meets these conditions, and that no negotiations to form such a group are under way.

Among the Israeli organizations that declared their intentions in bidding are Arison Holdings, Eurocom, the Israel Corporation and Poalim Investments, none of which has a fully outlined offer to acquire the control in Bezeq.

One of the main problems Israeli organizations face is financing for the deal, as the credit to purchase Bezeq shares is classified by the banks as credit to Bezeq itself. The credit already granted the company, in addition to the $600 million credit granted Gad Zeevi for his purchase of a 20% stake in the company, already exceeds the credit level Israeli banks are allowed to extend to a single entity.

This means investors interested in Bezeq must get cash from foreign banks, themselves in no hurry to grant credit to investments in the communication sector. It seems only a partnership with a well-known foreign heavyweight will earn Israeli investors the credit they need for the deal.

The only foreign corporation to have shown interest in the deal is Apax Europe, which sources estimate is unlikely to actually submit a bid.