012 Smile Telecom Ltd., the Internet services provider and international calls carrier, controlled by Yosef Maiman through Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL), wants to become Israel's fifth mobile operator. Sources inform ''Globes'' that Maiman is seeking to delay the opening of the international calls market to more carriers in order to give him time to thoroughly consider participation in tenders for frequencies due to be published by the Ministry of Communications.
The frequencies tender is due to be published in mid-September. Maiman's request implies that he wants to compete directly against the mobile operators, rather than seek an mobile virtual network operator (MVNO) license to operate in a niche market like New Hamashbir Lazarchan Ltd. (TASE:MSZB) unit 365 Telecom Ltd., Ituran Location and Control Ltd. (Nasdaq:ITRN); TASE:ITRN), Free Telecom Ltd. and others are planning.
Maiman therefore wants to prevent companies such as mobile carrier Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) from entering the international calls market, and the merger of IDB Holding Corp. Ltd. (TASE:IDBH) units mobile carrier Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) with ISP and international calls carrier NetVision Ltd. (TASE: NTSN).
Under Ministry of Communications terms, if Maiman does not apply for an MVNO license by August 28, Partner can apply for an international calls carrier license, a service that it currently cannot offer. Maiman fears that Partner's entry into the international calls market will hurt Smile and damage his wish to enter the cellular market. This was also his motive when he asked Minister of Communications Moshe Kahlon not to allow HOT Telecommunication Systems Ltd. (TASE: HOT) to become an ISP without full structural separation from its cable and telephony operations.
Maiman's plans strengthens the tender, giving rise to hopes that the two bands of frequencies offered will both be bought: one by Mirs Communications Ltd. and the other by Smile. Moves by the Ministry of Communications and the Ministry of Finance have created an opportunity to expand competition in the cellular market with operators that will invest in infrastructures. The benefits and incentives that the two ministries are prepared to offer new players creates an opportunity that won't be repeated, as they create ideal conditions for the entry of a new player. The measures include the requirement to share sites; compelling current carriers to permit inland roaming for new operators (similar to international roaming services), which will facilitate new carriers difficulties in building new cellular sites; lower licensing fees, frequencies fees, and royalties.
The Ministry of Communications was planning to publish a hearing on inland roaming, but it will not be held because of disagreements within the ministry's professional echelon, to the delight of the current mobile carriers. The hearing is part of the tender, since without certainty that inland roaming will reach Israel, neither Mirs nor Smile can bid in the tender or promise to build mobile networks.
Inland roaming is also critical for new operators because it allows them to provide service immediately by using the infrastructures of the existing mobile carriers as the new carriers gradually build their own networks.
However, a scenario in which two new mobile carriers set up new networks does not appear realistic. "Globes" earlier reported that HOT and Mirs controlling shareholder Patrick Drahi discussed with Maiman the possibility of establishing a joint cellular venture. There was even talk of HOT acquiring Smile. It cannot be ruled out that they will conclude that it is better to join forces and establish a single company rather than for each of them to go their separate ways.
Published by Globes [online], Israel business news - www.globes-online.com - on August 24, 2010
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