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Israel Telecom plans to take full control of satellite TV operator YES in a deal worth up to 1.05 billion shekels ($271 million) that would eventually allow it to package TV, phone and Internet services, it said on Wednesday. Already a shareholder, it said it would buy the remaining 50.2 percent of YES from Eurocom, a company controlled by Shaul and Yosef Elovitch, who also owns stakes in Bezeq. Bezeq has long sought to merge with YES to save costs and allow it to combine TV, phone and Internet sales, something cable company HOT already does. Israel’s anti-trust commissioner gave its permission for Bezeq to merge with YES last year. Bezeq will pay 680 million shekels in cash for the shares and 1.54 billion shekels in loans provided by Eurocom to YES. Eurocom will be entitled to two additional contingent payments. The first, for up to 200 million shekels, will be paid based on tax synergies and the second, for up to 170 million, to be based on the business results of YES over the next three years. The deal requires approval from the Communications Ministry and shareholders. The ministry is in the process of creating a wholesale telecoms market that will allow other companies to use the infrastructure of YES and HOT. Shares in Bezeq, which has a phone and DSL internet network and owns mobile phone and long-distance-calling units, were up 3.2 percent in afternoon trade in Tel Aviv versus declines in key market indexes. UBS analyst Roni Biron, who rates Bezeq “neutral”, expects the operational merger with YES to gradually unlock a tax asset of 900 million shekels based on accumulated YES losses which are eligible for tax relief. These tax benefits will flow to net income and boost dividend payments, Biron said in a note to clients. Bezeq should also reap savings and other operational benefits of about 1 billion shekels, he said, adding that YES’ market share in the pay-TV market should rise. “We see market share upside as Bezeq levels up the playing field with HOT and starts offering triple-play (TV, phone and Internet),” Biron said. HOT is owned by French cable group Altice. ($1 = 3.8716 shekels) (Reporting by Steven Scheer and Tova Cohen; editing by Jason Neely)]]>