The Israeli mobile giant Cellcom will buy Golan Telecom for NIS 1.17 billion ($300 million) after a lengthy bidding process, Cellcom announced Thursday.
The deal, which would make Cellcom Israel’s largest cellular service provider, still requires the approval of the Communications Ministry and the Antitrust Authority. After acquiring Golan, Cellcom would hold 37 percent of the market, the largest market share in Israel by a wide margin.
Golan Telecom was established in 2012. The provider took the Israeli market by storm, offering fixed-price packages that were far cheaper than the competition. The company is a virtual provider, piggybacking onto the antenna network and physical relay station infrastructure owned by Cellcom.
Golan had begun to install its own statewide network of antennas, but in the beginning of the year started dismantling them. The eventual installation of its own infrastructure was one of the conditions of Golan’s operating license.
Maintaining its own physical network would cost Golan some NIS 90 million ($23 million) per year, which was beyond its reach, the company had said.
Golan owes Cellcom NIS 400 million ($103 million) in roaming charges for using its network, and the larger company agreed to forgive the debt as part of the merger. Its purchase of Golan is thus nominally valued at NIS 1.6 billion ($411 million).
Cellcom CEO Nir Stern said Thursday morning, when the company officially announced its intention to purchase Golan in a notice sent to the Tel Aviv Stock Exchange, that the company would “preserve Golan Telecom as an independent company and will welcome with open arms all Golan employees.”
“Cellcom has proven its ability to expand the range of services in transitioning from a cellular company to a company marketing landlines, internet and television, despite the strong competition. Acquiring Golan Telecom will enable us to have a cheaper brand in our portfolio, and I am convinced of this merger’s ability to succeed,” Stern said.
According to the Hebrew-language business daily The Marker, the sale of Golan will be bad news for consumers, spelling a price hike of NIS 10-20 ($2.5-$5) per customer per month.