Internet Gold Golden Lines Ltd. (Nasdaq: IGLD; TASE:IGLD) subsidiary 012 Smile.Communications Ltd. (Nasdaq:SMLC; TASE: SMLC) plans to acquire a cellular brand through which it will provide services by connecting to a cellular network.
"Globes" has obtained a copy of Smile's engineering specs, which indicate that it does not intend to be merely a mobile virtual network operator (MVNO) that only buys airtime from cellular operators and uses their end-to-end infrastructures. The company intends to acquire a brand and create the same model currently used by Internet service providers (ISPs) vis-a-vis Bezeq The Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and Hot Cable Systems Media Ltd. (TASE: HOT). In other words, Smile will pay a transmission fee for use of the network.
This model is fundamentally different from the model used by MVNOs, which only buy airtime from cellular operators and are totally dependent on them. Smile's model proposes that subscribers obtain the company's full prefix number and the company will sell the handsets and be responsible for the billing using the cellular operator's network.
The advantage of this model is its demonstration of seriousness and readiness to bear the investments in establishing a cellular brand that will be linked to billing and other systems and will be less parasitic on the cellular operator's network. Cellular operators will not willingly consent to such a system, and will put obstacles to block access to their networks or will demand that the MVNO bear the costs of strengthening the network.
Published by Globes [online], Israel business news - www.globes-online.com - on June 19, 2008
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