If we could rely on the heads of the Ministry of Communications to do the right thing, we would recommend them to set up a professional, serious committee made up of experts and people from the industry to mark out a path for the incompetent leadership that within just a year has brought the ministry and the entire telecommunications industry to the brink of the abyss. But the chances of such a committee being appointed, or even more of anyone really adopting its recommendations, are practically zero. It's enough to look at the conduct of the Filber committee on broadcasting to decide to forget the idea.
There has never been a period of such chaos in the telecommunications market as we are now experiencing, and all because of politics and the political hacks who have destroyed whatever was good at the Ministry of Communications, alongside inappropriate and unworthy appointments. For the time being, we are the height of the latest storm, surrounding the merger of Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Golan Telecom, a merger that could affect the entire telecommunications market either positively or negatively. The letter that Golan Telecom sent to the prime minister, in which the company warned that it faced collapse if the merger between the two companies was not approved, is like a parricide pleading for mercy on the grounds of being an orphan.
Michael Golan flouted all the rules, flagrantly breached the terms of his license, made a billion shekel killing out of the state, and now comes along and declares that his company will collapse. How many people do you know who could so cynically exploit the state and then coolly dare to claim that they will suffer immense damage unless the state gives them carte blanche to make a billion shekels?
Golan's attack on the minister of finance in his letter shows how much he lays the blame on him. What a joke! Kahlon, who enabled Golan to get where he has got to, has now become his sworn enemy; and Golan, who saw Kahlon as a springboard to a billion shekels cash in his pocket, resents him for torpedoing the deal. A circus.
The next instalment was the Ministry of Communications' statement in which it declared that it was fully prepared for the day that Golan Telecom collapses. Let anyone who believes that stand up now. The ministry hasn't the faintest idea what to do in that situation, and telecommunications operators that have been in talks with it say it's all a bad joke.
Is Golan really prepared to go to the line?
Whether Golan Telecom will collapse or not is the ultimate question just now, and the Antitrust Authority, rightly, is not prepared to play this game of threats. It cannot make decisions on the basis of threats that companies will collapse, because that is what all the companies are saying in the face of the merger. Could the threatened scenario materialize? Presumably it could, but it's not certain that it would be as terrible as Golan makes out.
No mobile carrier can immediately absorb hundreds of thousands of subscribers, that's true - but why should the company's collapse necessarily mean the end of service? Are Golan's subscribers not taking a ride on Cellcom's network, which provides the infrastructure for them? Is Golan really prepared to go to the line, to cut off the network and shut down service to a million customers in one fell swoop to take revenge on Kahlon and the government for preventing his deal? The theoretical threat is there, but it's not certain that it's realistic. What is certain is that whatever happens, we are not in good hands.
Despite everything, this merger should be examined professionally and not politically. The stance of the Antitrust Authority, which fears a rise in prices, is not entirely comprehensible. What does it mean by a rise in prices? If the price rises by ten shekels a month and in exchange there's investment in infrastructure and competition develops in the fixed-line market and in television as well, does this outweigh the price rise or not? Price levels are important, but they are not everything.
Look at the damage caused by the low quality of the networks. There are networks with a catastrophic quantity of dropped calls because of the reduction in the number of cellular sites. Shouldn't that be taken into account? And what will happen if Hezi Bezalel really enters the market? Won't that help to keep prices low? And what if Partner goes into television because it can make a profit out of it, can a fall in television prices be a consideration? In short, the decision is not simple.
Published by Globes [online], Israel business news - www.globes-online.com - on April 7, 2016
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