Netanyahu said to oppose Golan-Cellcom merger
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Netanyahu said to oppose Golan-Cellcom merger

PM, who is also communications minister, may scupper deal that could significantly raise cellular prices

A man walks next to an advertisement poster for Golan Telecom in Jerusalem , on November 05, 2015 (Lior Mizrahi/Flash90)
A man walks next to an advertisement poster for Golan Telecom in Jerusalem , on November 05, 2015 (Lior Mizrahi/Flash90)

Prime Minister Benjamin Netanyahu opposes the planned merger of Israeli mobile giants Cellcom and Golan Telecom and intends to prevent it from going through, Channel 2 news reported Sunday night.

Netanyahu, who also serves as communications minister, has reportedly said in closed conversations that Golan Telecom owner Michael Golan had “taken the country and the public for a ride” and had failed to live up to his obligations.

Finance Minister Moshe Kahlon has also criticized the planned NIS 1.17 billion ($300 million) merger, announced earlier this month.

“The Finance Ministry opposes the approval of the deal, and warns that approving it will severely damage competition in the cellular market and [bring] with it a price increase,” a statement from the Finance Ministry said.

The Ministry said Golan was granted a tender to enter the market with the intention of encouraging new operators and increased market competition.

Prime Minister Benjamin Netanyahu addresses a Likud faction meeting at the Knesset on Monday, October 19, 2015 (Miriam Alster/Flash90)
Prime Minister Benjamin Netanyahu addresses a Likud faction meeting at the Knesset on Monday, October 19, 2015 (Miriam Alster/Flash90)

“The merger of Golan and Cellcom is a dire mistake. The cost of calls will rise to hundreds of shekels per month instead of the few dozen shekels the public now pays. Approving the merger will bring us back to the days of no competition, and consumers will become victims,” the statement said.

Kahlon served in a previous Netanyahu government as communications minister. The reform in the cellular service market was one of his major achievements.

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.

Public Security Minister Gilad Erdan, who succeeded Kahlon at the Communications Ministry, has called on the Antitrust Authority and the Communications Ministry not to approve the deal. Erdan said it would be better to penalize Golan with a fine than allow the merger to proceed.

Finance Minister, Moshe Kahlon at the Ministry of Finance in Jerusalem, July 20, 2015. (Yonatan Sindel/Flash90)
Finance Minister, Moshe Kahlon at the Ministry of Finance in Jerusalem, July 20, 2015. (Yonatan Sindel/Flash90)

Golan Telecom, established in 2012, 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 started dismantling them at the beginning of the year. 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 the company had said is beyond its reach.

The company owes Cellcom NIS 400 million ($103 million) in roaming charges for using its network, and the bigger 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).

 

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