Bezeq announces plans to acquire Golan mobile provider

No sum disclosed in communications giant’s statement; Golan’s boss sought to sell company for $1 billion

The offices of Bezeq, the country's largest telecom group. (Kobi Gideon/Flash90)
The offices of Bezeq, the country's largest telecom group. (Kobi Gideon/Flash90)

Cellphone giant Pelephone has made an offer to buy smaller rival Golan Telecom, parent company Bezeq said in an official filing Sunday.

Bezeq, a telecommunications behemoth, did not specify details of the proposal.

Cellcom, another cellphone company, has also expressed interest in acquiring Golan, which helped revolutionize the market when it started operating in 2012, according to an Israel Radio report.

Golan was one of six new companies to enter the market when it was partially deregulated, an extremely popular move that brought drastically lower prices to consumers.

Golan is a virtual operator – meaning the company uses infrastructure belonging to a different provider and essentially piggybacks its cellular network, and owes Cellcom some NIS 400 million ($103 million) for the service.

Earlier Sunday morning, the Hebrew-language business paper Calcalist reported that the HOT cable company would not pursue acquiring Golan.

The company is owned by Michael Golan, an Israeli entrepreneur of French descent, who has said he seeks to sell the firm for NIS 1 billion (c. $250 million).

Whoever buys the company will have to get the approval of the country’s antitrust regulator.

According to financial daily Calcalist, HOT had the best chance of receiving approval from the Antitrust Authority to purchase Golan, since its own cellphone operator, Hot Mobile, is the smallest in the market. Even a merger with Golan would not increase the company’s size to anywhere near the size of the three major operators, Cellcom, Partner (Orange) and Pelephone.

Last week, Communications Ministry Director-General Shlomo Filber said in an interview with Bloomberg that Israelis have too many service providers to choose from and that monthly cellphone bills are too low.

Filber said at the time that he had no objection to reducing the five major network operators, including the Bezeq landline company’s cellular unit, to four.

“I don’t see a problem with Cellcom, Partner or Bezeq buying Golan if they want,” Filber said. “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,” he told Bloomberg.

He later sought to clarify his comments, which were understood in Israel as a willingness to undo a de-regulatory reform in the mobile telephony market championed by then-finance minister Moshe Kahlon. Kahlon’s breaking up of the cellular market cartel resulted in prices dropping by as much as 80 percent for users of cellphones.

Hours after the Bloomberg interview was published, on October 26, Filber released a statement where he called the quotes attributed to him “inaccurate,” and said that while he believes prices in the mobile phone market are too low, he does not think it is a regulatory issue, and it would be dealt with by market forces.

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