You can never know when a stock has hit rock-bottom, especially in these volatile times.
But there's a pretty reliable sign that the state-run phone company Bezeq will shortly be reaching an all-time low. After five years of procrastinating, the State of Israel finally decided this week to officially announce its intention to sell the company.
It's so sad, it's funny. Throughout the bubble years, while the markets and especially telecommunications stocks surged, the Israeli government maintained a death-grip on the company. Now that it has relaxed its clutch, the market has collapsed.
Anyway, one of the most stubborn obstacles hindering Bezeq's privatization was its workers, who insisted that the government guarantee their rights before relinquishing control of the company.
After two years of head-banging between the workers and management, prodded from the sidelines by the Finance Ministry and Government Companies Authority which are responsible for Bezeq's privatization, the parties reached a compromise. That was a year ago.
The compromise was horribly expensive for the taxpayer. Two thousand Bezeq workers demanded, and got, plush terms for early retirement by 2008. The cost has been estimated at NIS 1.6 billion, to be financed through an offering on the stock market.
And that was just the beginning.
Sounds like a heavy price, but for a good cause, right? What's NIS 1.6 billion in exchange for privatizing the telecoms mammoth?
Otherwise, the deal's supporters pointed out, the state might never have sold the company because no buyer would risk the potential for labor unrest.
We have bad news. Bezeq's NIS 1.6 billion devaluation to keep its workers happy was just the beginning. Now we learn that the workers have hired three consultants to assist in the company's privatization: a lawyer, an economist and a wheeler-dealer well-known in Jerusalem circles.
Wait a sec ¿ the workers - consultants on privatization, what's going on? They've assured their early retirement at a cost of NIS 1.6 billion, what else to they want? Nor are they vulnerable to the travails of the tempestuous telecommunications markets, like private-sector workers, as Bezeq's staffers work under a collective employment contract.
Well, it turns out that the NIS 1.6 billion are merely compensation for the risk they are exposed to by the company's privatization. But once the company is privatized, they want the perks of a private company ¿ options.
But why hire the consultants now? The company hasn't been sold yet. Good question, to which only one answer offers itself: The workers are cooking up a stew of demands not from Bezeq's buyer, but from the contenders.
Got it? They aren't hanging around waiting for the company's privatization, they want to be part of the process of choosing a buyer. There are no legal mechanisms to assure their involvement, but they have the clout to persuade buyers to talk with them too.
Naturally, everything will be done legally, hence their move to hire attorney Ram Caspi to advise them. It will also be done with the utmost of political cunning, hence their move to hire the director-general of the prime minister's office, Moshe Leon (who served under Benjamin Netanyahu).
But who will help them stack up their demands, and explain that the cost thereof will be rolled over onto the state in the form of a lower price it can demand for the company? For that they hired Doron Cohen.
Cohen is a talented economist and nice guy who previously headed ¿ the Government Companies Authority. Yes, that institution responsible for privatizing state-run companies at the maximum benefit to the state.
There is no conflict of interest here, Cohen told us yesterday. He is representing the workers in their moves vis a vis a buyer, not the state in the form of the Government Companies Authority.
True enough. But when asked if the workers deserve double compensation for the company's privatization, or whether he realizes that their preliminary demand to receive options after privatization will drag down the state's asking price ¿ he preferred to stay mum.