Sources inform ''Globes'' that mobile carriers Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Pelephone Communications Ltd. have agreed in principle on the main items in an agreement to set up a shared 4G network. Although there are still open issues, the carriers will reportedly soon be able to submit an agreement to their boards of directors for approval, after which they will sign it and submit to the Antitrust Authority and the Ministry of Communications for approval.
Golan Telecom Ltd. is not currently part of these negotiations, but the door is open if it wants to become a partner in the venture, just as it has been invited to participate in the shared 4G network of Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) and HOT Mobile Ltd..
Cellcom and Pelephone will equally share the cost of establishing a shared network, giving the carriers substantial savings. Each carrier will own 50% of the network, but they need to agree to equally sharing the costs for hooking up to antennas. This is because Cellcom's independent transmission network connects 90% of its sites, while Pelephone uses the fiber optic network of its parent company, Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ).
One idea mooted is to divide Israel into north and south, which each carrier providing the transmission to sites in each region. This has little significance because the parties will figure out their own offsetting mechanisms. In this context, Bezeq is establishing a new designated network for 4G carriers, which will allow carriers to independently manage data transmission between antennas and the network core.
The prior and close relations between Pelephone CEO Gil Sharon and Cellcom CEO Nir Sztern has greatly helped in moving the negotiations forward. Sztern served as Sharon's deputy at Pelephone before his appointment as CEO of 013 NetVision Ltd. and later of Cellcom following the two companies' merger.
Cellcom and Pelephone have decided not to seek a preruling from the Antitrust Authority, but to submit a final agreement to it for approval, in order to avoid dragging out the approval process.
Published by Globes [online], Israel business news - www.globes-online.com - on November 26, 2013
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