Israel's Cellcom mulls purchase of rival Golan Telecom

Israel-based Cellcom said it will examine a possible acquisition of Golan Telecom after its smaller rival appointed an investment bank to explore options including a merger or sale.

Cellcom said it was reviewing the idea "following an invitation by Bank Rothschild, representing Golan Telecom's shareholders." However, the mobile operator noted that "there is no assurance that the company will make an offer to purchase Golan Telecom nor as to the execution of such a sale."

Golan Telecom said earlier this week that its shareholders had given the investment bank "the mandate to evaluate and explore options that could lead to a sale, acquisition, merger, but could also leave Golan Telecom independent."

The company was established in 2012 after the Israeli mobile market was opened up to competition from mobile virtual network operators (MVNOs). It currently has 850,000 subscribers.

As the Jerusalem Post noted, Golan already uses Cellcom's network, meaning that a merger between the two would make economic sense.

In April, the two companies also stepped up efforts to gain approval of network sharing agreements covering  2G/3G/4G infrastructure after the government gave the green light to a deal between rivals Hot Telecom --owned by Altice -- and Partner Communication. A report in Haaretz noted that the Communications Ministry has set an end-year deadline for Golan to have set up its own network.

Jerusalem Post noted that a merger proposal might not prove popular with the ministry because of the impact it could have on consumer prices. As things stand, the Communications Ministry is not commenting on the situation until a concrete plan has been unveiled.

Some might think that the Israeli mobile market is ripe for consolidation: the arrival of rival players in 2012 sparked a price war that affected subscriber numbers and revenue at the three traditional network operators Cellcom, Partner and Bezeq-owned Pelephone.

Furthermore, in January the ministry awarded LTE spectrum in the 1800 MHz band to six companies, opening up the LTE market to three new players and raising the prospect of six LTE players serving a country with a population of just over 8 million.

As well as the three traditional operators, Hot Mobile, Golan Telecom and new mobile operator Marathon 018 also acquired LTE frequencies.

Interestingly, Xavier Niel - founder of France's Iliad and Free Mobile -- was behind the launch of Golan Telecom in partnership with Michael Golan.

For more:
- see this Haaretz article
- see this Jerusalem Post article
- see this Reuters article
- see this Cellcom statement

Related articles:
Cellcom Israel, Golan Telecom seek approval for network-sharing deal
Israel awards LTE spectrum to 6 players
Cellcom Israel reports 18% rise in Q2 net profit
Cellcom, Pelephone follow Partner with LTE launches in Israel
Xavier who? Iliad owner makes his mark in the U.S.

Suggested Articles

Sprint said it will offer discounted service to customers age 55 and above.

Unlimited data plans placed a strain on carrier networks last year, but according to OpenSignal the carriers met the challenge.

Verizon plans to bring 5G to four U.S. cities this year and hopes to have standards-based equipment in place for some of those deployments.