Cellcom Israel agreed to buy 100 per cent of the shares in Golan Telecom for ILS 1.17 billion (€276.6 million/$301 million), scuppering plans by Bezeq-owned Pelephone to buy the smaller rival mobile operator.
Golan Telecom is currently owned by French businessmen Xavier Niel and Michael Golan, and competes on the market with three larger rivals -- Cellcom, Pelephone and Partner Communications -- as well as Hot Mobile, owned by Altice.
The move by Cellcom comes at a time when the Israeli mobile market had been expected to consolidate because of cutthroat competition and concerns about the ability of companies to invest in infrastructure.
However, there is no guarantee that Cellcom Israel will win regulatory approval for the acquisition.
"There is no assurance that the agreement shall be approved by the Israeli regulators, which the company estimates to be challenging, nor as to the execution of such a sale. The company can provide no assurances as to the impact of this sale of holdings in Golan on the competitive environment in the market," Cellcom said.
Golan launched operations in 2012 when the market was opened up to competition. It has about 900,000 customers and is expected to end 2015 with total revenues of more than ILS 500 million.
Cellcom Chairman Amil Erel noted that the acquisition of Golan allows the larger company to add a low-cost brand to its portfolio. "I'm confident that Cellcom's management will be able to successfully combine Golan's operations as the company's low-cost brand," Erel said.
Cellcom CEO Nir Sztern added that Cellcom intends to run Golan as an independent company.
Earlier this week, Bezeq said its mobile subsidiary Pelephone had made a conditional offer to buy rival Golan Telecom, without revealing any financial details.
In August, Golan Telecom shareholders gave Bank Rothschild the mandate to "evaluate and explore options that could lead to a sale, acquisition, merger, but could also leave Golan Telecom independent." The Times of Israel has previously said that founder Michael Golan was seeking ILS1 billion for the company.
For more:
- see the Cellcom release
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