Israeli telecoms chief signals change in approach to competition

The new director general of Israel's Ministry of Communications has signalled a possible change in approach towards mobile competition in the market, saying that mobile prices are too low and there are too many operators on the market.

Speaking to Bloomberg, Shlomo Filber, who was appointed in June by Prime Minister Benjamin Netanyahu, said the market "has lost its correct balance regarding price", adding that low profits undermine the ability of companies to invest.

The remarks made by Filber could signal a departure from the approaches of previous ministers, who increased the number of mobile providers and caused consumer prices to fall.

Bloomberg noted that the incumbent mobile operators -- Cellcom Israel, Partner Communications and Bezeq-owned Pelephone -- lost billions of shekels in revenues after new network and virtual operators were invited to move into the sector.

Indeed, Golan Telecom, which is partly owned by French entrepreneur Xavier Niel, started a price war to gain market share. The company was established in 2012 after the Israeli mobile market was opened up to competition. It currently has 850,000 subscribers.

In August, Cellcom said it would examine a possible acquisition of Golan Telecom after its smaller rival appointed an investment bank to explore options including a merger or sale.

"I don't see a problem with Cellcom, Partner or Bezeq buying Golan if they want," Filber told Bloomberg. "The market will continue to be competitive even with four main players and other niche players, with rational prices that will enable reasonable profitability and infrastructure investment."

Pelephone also reported second-quarter results in August that reflected the difficulties of mobile operators in Israel. The company said revenue was affected by a drop in tariff prices due to competition in the Israeli mobile market and the transfer of existing customers to lower-priced services.

For more:
- see this Bloomberg article

Related articles:
Israel's Pelephone net profit more than halved during Q2
Israel's Cellcom mulls purchase of rival Golan Telecom
Orange sets terms to end brand-licensing deal in Israel within 2 years
Orange chief tells Israeli PM Netanyahu he regrets Partner Communications remarks
Cellcom Israel, Golan Telecom seek approval for network-sharing deal

 

Suggested Articles

Qualcomm may finally be moving closer to purchasing NXP. A Beijing official reportedly said the deal is "looking more optimistic now."

T-Mobile says that the integration of the Sprint network will be similar to its integration of MetroPCS and will in some ways be even easier.

After years of fits and starts, Sprint and T-Mobile announced a plan to merge their operations. Here is our complete coverage of this news.