Cellcom joins Israel Electric in bid to jumpstart faltering fiber optic venture
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Cellcom joins Israel Electric in bid to jumpstart faltering fiber optic venture

Cellular operator to pay NIS 100 million for a 70% stake in initiative to vastly increase the country's internet speed

Left to right: Ofer Bloch, the CEO of Israel Electric Corp., Ami Erel, the chairman of Cellcom; Yiftach Ron-Tal, chairman of Israel Electric; Nir Sztern, CEO of Cellcom and Doron Cohen, the CEO of IBC; Aug.8, 2018  (Yossi Weiss, Israel Electric Corp)
Left to right: Ofer Bloch, the CEO of Israel Electric Corp., Ami Erel, the chairman of Cellcom; Yiftach Ron-Tal, chairman of Israel Electric; Nir Sztern, CEO of Cellcom and Doron Cohen, the CEO of IBC; Aug.8, 2018 (Yossi Weiss, Israel Electric Corp)

Israel Electric Corp. said Wednesday that cellular operator Cellcom Israel Ltd. has entered into a strategic partnership with the utility’s fiber optic venture with an injection of NIS 100 million ($27 million).

The electricity company said that a memorandum of understanding was signed Wednesday morning between the two parties, giving Cellcom a 70 percent stake in the Israel Broadcasting Company, an Israel Electric subsidiary set up in order to deploy fiber-optic network across the country. Israel Electric holds the other 30 percent.

The entry of a “leading Israeli telecommunication” firm as a partner in the venture “will give the fiber-optic initiative a real opportunity to cope in a competitive market,” said Yiftah Ron-Tal, the chairman of Israel Electric, in a statement.

The deal is subject to regulatory permits.

A decision on Sunday by ministers to breathe life into the sputtering project paved the way for the partnership. The cabinet gave its backing to a proposal by Communications Minister Ayoub Kara to ease the terms of the license granted to the IBC, allowing it to provide fiber optics for just 40 percent of households, located in major cities, rather than across the entire country.

The more modest project was a key Cellcom condition for entering the partnership deal.

IBC was set up in 2013 by a consortium including Israel Electric and Sweden’s Via Europa to fulfill a government plan aimed at boosting the country’s internet speeds with fiber optics, a method that uses light signals beamed along hollow cables rather than electricity along copper wires, as the current system uses. Fiber optics can offer download speeds of several gigabits per second, compared to current speeds of tens of megabits per second.

The initiative, however, has faltered, with IBC succeeding in connecting only some 150,000 households, as layout costs far exceeded expectations.

Last month a UK-based broadband comparison service published its annual internet speed ranking showing Israel had slipped 10 places to 70th out of 200 countries monitored in terms of average bandwidth.

The report found the average download speed in Israel is around 7.64 megabits per second, compared to 7.2 Mbps in 2017. First in the index was Singapore with 60.39 Mbps, while the US ranked 20th with 25.86 Mbps.

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