Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Golan Telecom Ltd. have asked Minister of Communications Gilad Erdan and Minister of Finance Yair Lapid to be allowed to compete together in the 4G frequency tender, sources inform “Globes." Cellcom and Golan are protesting that the terms of the 4G tender required them to compete separately, even though the two companies have a network-sharing agreement.
Cellcom and Golan’s request comes after the companies submitted their comments on the terms of the tender, and prior to final decisions being made. According to the current terms, the companies must enter separately, and they may not coordinate their positions, though the Ministry of Communications knows that the two companies have a network sharing agreement.
Because the companies must hold 20 MHz per network, a situation arises where they will be forced to pay much more separately. What is ultimately likely to happen is that they will be forced to return frequencies that they don’t need at all.
Prior approval of the submission of joint bids will create certainty, which will allow the companies to plan how many frequencies they need, and will create relevant competition with the other participants as well. The companies claim that if they will need to return extra frequencies (because each carrier may not have more than 20 MHz), and what will happen is that there will be repeat competition over the extra frequencies that are returned. This will harm the tender participants who did not win, because they will then be forced to pay higher rates than those who won in the tender, as the number of frequencies will be limited.
Because of the unreasonable nature of the terms, the companies believe that the matter will not pass the judicial test, and have asked that they be given the option of meeting the ministers in order to explain the importance of the matter to them.
The tender is expected to be held in November-December of this year.
Published by Globes [online], Israel business news - www.globes-online.com - on September 11, 2014
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