The Ministry of Communications has notified Golan Telecom Ltd. and Hot Mobile Ltd. that under the terms of Hot Mobile's license, it cannot provide national inland roaming services to Golan Telecom, thereby effectively vetoing the agreement between the two companies.
As reported exclusively in "Globes" last week, a legal problem has arisen with Hot Mobile's license, which is more recent than the licenses of the veteran operators the Hot Mobile license does not permit it to host other operators; it can only be hosted on networks of the veteran operators. In order for Hot Mobile to host Golan Telecom, the Ministry of Communications must therefore revise Hot Mobile's license, which requires a hearing.
A public hearing is something about which the Ministry of Communications must think carefully. Golan Telecom's option of switching to the Hot Mobile network in the coming months has therefore been eliminated, and it may never be possible.
Information obtained by "Globes" indicates that as a result of queries received by the Ministry of Communications, the legal department has begun examining the question of whether HOT Mobile can, under the terms of its license, host other operators using its network. The queries showed that Hot Mobile is entitled to provide only the services appearing on the list of services in its license, and hosting other operators is not on that list.
The license explicitly emphasizes that Hot Mobile (the same is true of Golan Telecom's license) can use other networks for national inland roaming, because it is a new operator in the market, but cannot host other operators. This clause appears only in the new operators' licenses, not in those of veteran operators Pelephone Communications Ltd., Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR).
Hosting Golan Telecom on Hot Mobile's network therefore requires a hearing. Since experience shows that such a hearing is a long process requiring many months for the Ministry of Communications to prepare and hold, it is obvious that the option of cooperation between the two companies is becoming extremely questionable, and may never take place. The Ministry of Communications must decide on its policy before it holds a hearing, and so the revision may not accord with its policy on Golan Telecom.
There are now many possible scenarios. Deprived of the opportunity to share Hot Mobile's network, Golan Telecom may decide to put the company up for sale, with the first potential buyer being Hot Mobile, instead of a roaming agreement on the latter's network.
Market sources believe that the agreement between the companies would eventually have culminated in the sale of Golan Telecom to Hot Mobile, and it is possible that Ministry of Communications' announcement may speed up the process. At the same time, it is unclear whether the Ministry of Communications and the Antitrust Authority will approve such a deal, so it appears that the options are running out for Golan Telecom. Golan Telecom has received offers for selling the company to various parties outside the communications market; it therefore cannot be ruled out that it will have no alternative to start negotiations and sell the company, if it wishes to avoid liquidation.
Published by Globes [online], Israel business news - www.globes-online.com - on July 12, 2016
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