In a dramatic turn of events in Israel's telecommunications market, it looks as though Golan Telecom will switch to using the infrastructure of Hot Mobile, which has an agreement for a joint network with Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR). This is instead of using the infrastructure of Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL). The companies are believed to be about to announce the move shortly.
Under Ministry of Communications policy, Hot Mobile can host operators on its network without Partner's agreement. It therefore looks as though Golan Telecom and Hot Mobile will sign an agreement that will enable Golan Telecom to survive as an independent company, to continue serving its subscribers, and to avoid a sale at a rock bottom price.
At the same time it is clear that a collaboration agreement between Golan Telecom and Hot Mobile could lead to ties between the two companies becoming closer, and possibly even to a merger, which would meet with only slight objections from the Antitrust Authority because both carriers are small players in the mobile telephony market, unlike in the proposed merger with Cellcom, to which the Antitrust Authority was completely opposed.
The significance of the move is that Golan Telecom simply gains time, and it will not operate as a virtual operator on Cellcom's network, which it has used up to now. A further point is that in this situation Golan Telecom will have to repay the NIS 600 million debt it owes Cellcom.
Published by Globes [online], Israel business news - www.globes-online.com - on June 9, 2016
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