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Bezeq, Israel's state-owned telecommunications company, is moving to overcome an image of providing slow, inferior service, as it prepares to face its first competition for international service.

The 12-year-old company, with $2 billion in 1994 revenues, is now 85% digital, and the system is projected to be 100% digital by yearend. Bezeq has been spending $660 million annually in recent years to develop new technology.

"When we have competition in 1996, we'll have to push our uniqueness" as an ad message, said Ad Director Baruch Dagon. "Bezeq's advertising department is preparing for 1996's competition like a country prepares for war."

Goldnet Communication Services, a joint venture of Bezeq and AT&T, provides e-mail, fax transmissions and other services. Bezeq's cellular phone network Pelephone Communications, opened to competition late in 1994, boasts 200,000 subscribers and aims for 1 million in 2000. Rival Cellcom, a cheaper service, has more subscribers. Both market mainly in newspapers.

Nearly 65% of Bezeq's $17 million ad budget goes to TV campaigns, with 25% to newspapers and the rest on radio, outdoor and direct mail. Among its advertised services are local and international calls, digital services and phone and fax lines.

Bezeq is handled by four Tel Aviv agencies-Reuveni Fridan, Ariely, Dahaf Ahad and Biletzky Armoni-and the state's Government Advertising Agency.

Bezeq entered Hungary in 1994 and is putting 110,000 phone lines in place there, and will install 70,000 more in Poland, competing against Telekomunikacja Polska.

Israel's telecom sold 23% on the Tel Aviv Stock Exchange in 1990 and 1991, and plans to offer another 26%. The U.K.'s Cable & Wireless owns a 10% stake.


The government plans to sell 49% of massive state telecom Turk Tekekomuniksaiyon, Ankara this year, and analysts predict the stock offering could raise $8 billion to $25 billion.

TT, with $2.5 billion in annual revenue, was split from Turkey's Postal Telegraph & Telephone Administration in 1994.

TT will also sell its interests in cable TV service, pager systems, data communications, card telephones, cellular phone and satellite systems. Cenajans/Grey, Istanbul, handles an $8 million privatization marketing budget, focusing on international business and news publications.

The Turkish market is an odd contrast: Penetration is just 20% (up from 2% 15 years ago), but 75% of the national infrastructure is digital. "We are far ahead of Germany and many other big industrial countries in telecommunications systems," said Tanju Argun, general manager of equipment manufacturer Netas, 51% owned by Canada's Northern Telecom.


South Africa's Pretoria-based Telkom remains staunchly government-owned and operated. But privatization is under discussion-perhaps allowing a competitor by 2000. One proposal would sell off 20% as early as June.

"We're not sure that we're going to be in a monopoly situation in the future, and we want to set that scene," said Ingrid Krige, external communications manager. Telkom runs a $1.9 million multimedia corporate campaign by Ogilvy & Mather Rightford, and product and service ads by J. Walter Thompson, both Johannesburg.

South Africa's cellular market is controlled by Vodacom, 50% owned by Telkom, which began full service in June 1994. Promoted by a Lindsay Smithers-FCB TV campaign, Vodacom boasts more than 260,000 subscribers.

Contributing to this story: Metin Demirsar, Istanbul; Drusilla Menaker, Johannesburg; Margo Lipschitz Sugarman, Jerusalem.

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