By Steven Scheer
JERUSALEM (Reuters) –ShareholdersinBezeqIsraelTelecomwillvoteThursday for a slate of directors that is expected to remove the controlling shareholder’s majority on theboardand pave the way for an overhaul ofIsrael’slargesttelecoms group.
Interest inBezeq‘s annual meeting has been building since January when activist investor Elliott said it had taken a 4.8 percent stake to push for changes in the wake of a securities investigation into the company’s management and owners.
Elliott’s calls have received backing of several other minorityshareholders, mainly Israeli institutions.
“What we are aiming to do is help and initiate moves to help the corporate governance of the company and also to project that to other public companies,” Ilan Raviv, chief executive at Meitav Dash Investments, told Reuters.
“We (institutions) are quite active but from this episode atBezeq, when there are extreme circumstances we will be more active than usual and take the gloves off,” he said. “It’s a very important message and we have to relay this message.”
BezeqCEO Stella Handler was arrested in February in connection with a wider investigation into alleged fraud, bribery and securities offences. She has denied any wrongdoing and plans to step down in July.
Controlling shareholder and former chairman Shaul Elovitch, a family friend of Prime Minister Benjamin Netanyahu, and a number of other officials connected toBezeqwere also arrested. They all deny any wrongdoing. Elovitch controlsBezeqthrough the indebted Eurocom group.
Directors implicated in the investigation have resigned, clearing the way for theboardto be overhauled.
The shareholdervotewill come four days after an Israeli court ordered the liquidation of Eurocom, and after fourth-quarter results showedBezeqstruggling in some of its business units. It also has cut its 2018 estimates and dividend payout.
Shareholderswillvoteon a newboardof 13 or 15 members, but the controlling shareholder will nominate just five or six. Interim chairman David Granot has said he does not plan to stand for chairman.
Typically in Israel, the controlling shareholder controls theboard.
“The appointment of an independentboardof directors … will restore investors’ confidence and pave the way for comprehensive strategic and streamlining plans for the company,” Barclays analyst Tavy Rosner wrote in a recent note to clients.
Shares ofBezeq, which was once a strong state-run monopoly but whose various units now face stiff competition, have fallen 12 percent this year after a 29 percent drop in 2017.
“A period of instability and dysfunction in the company’s governance is now coming to an end …Bezeqwill have aboardbefitting a company of its scale and strategic importance. All stakeholders will be able to look forward with confidence,” Elliott said last month.
(Reporting by Steven Scheer; Editing by Mark Potter)