Israel's Bezeq mulls raising stake in TV unit YES

JERUSALEM (Reuters) - Bezeq Israel Telecom (TLV:BEZQ) said on Sunday it will have to meet a series of conditions if it wishes to merge with its satellite television unit YES.

The anti-trust authority sent Bezeq, Israel's largest telecoms group, a draft of the conditions last week, it said in a statement to the Tel Aviv Stock Exchange.

"The company is interested in principle to prepare for the process of reviewing options to raise its stake in YES ... and study the conditions to be set by the anti-trust authority," it said.

Bezeq holds a 49.8 percent stake in YES, which has close to 600,000 subscribers. It has long sought to boost its holdings to save costs and be able to market a triple-play package of TV, phone and Internet and compete with cable company HOT, which already has a triple-play option.

In 2009, after the authority rejected a merger on grounds it would be anti-competitive, Israel's anti-trust court allowed the merger subject to certain conditions. But the country's high court later sided with the authority.

Bezeq and the anti-trust authority declined to give further details but Israeli media said Bezeq will be restricted to giving discounts in a triple-play package and it will not be able to buy exclusive content from abroad for a few years.

Israel's Communications Ministry favours opening up the multi-channel TV market to competition, which would lower costs to consumers. Mobile phone operators Cellcom (TLV:CEL) and Partner Communications (TLV:PTNR) have expressed interest in launching TV ventures.

Eurocom owns 50.2 percent of YES.

Bezeq's shares have risen close to 50 percent so far in 2013 but Citi analyst Michael Klahr two weeks ago lowered his recommendation for Bezeq to "sell" from "neutral" due to expectations of intensifying competition starting in 2014.

(Reporting by Steven Scheer)