Golan Telecom a worthy winner

Gad Perez

In the end, the most professional bidder won the mobile carrier tender.

Golan Telecom's win in the mobile carrier tender is justified. It isn't that Hezi Bezalel or Michael Gelfand are unworthy, but if we had simply been able to choose the kind of investor we wanted, Golan Telecom Ltd. should have been chosen. It is a tier-1 strategic investor in the world and it has great added value. The French group is a kind of correction to the failure of the two companies that preceded it in the tender - Bezalel's 018 Xfone Communications Ltd. and Gelfand's Select Communications Ltd. - which wasted precious time for the company that on the face of it has the best chance of meeting the task of readying the mobile carrier market for competition.

The tender exposed the serious problem of businessmen who get in over their heads and commit amounts of money with nothing to back it up. How is it possible that a company makes a bid in a tender without a bank behind it and which knows its limitations? That is a question that the next tenders committee will have to give some thought to, because such conduct is not to Israel's credit.

All the post-hoc critics of the tender should remember one thing: it had one purpose and was designed to meet it. It is true that a risk was taken, and a price is paid for the inexperience of such a tender, but ultimately, there are no grounds for criticizing the tenders committee for not anticipating that neither Bezalel nor Gelfand could secure a guarantee from an Israeli bank. It is not clear why the tenders committee disallowed guarantees from foreign banks; it was apparently due to conservatism, but the laws of a foreign bank in Israel is not the law of a bank in Africa.

There are other reasons why Golan Telecom's win is fitting. By stopping its bid at NIS 360 million, it demonstrated its seriousness and refusal to enter an unnecessary adventure. It saw no profitable business plan worth more than this, and stopped. Simple.

Golan Telecom submitted the most serious bid by the tender's participants. Tenders committee members said that its proposal demonstrated its seriousness. There have been many charges in the past couple of weeks by Select Communications about the over-concentration in Israeli banks, which would not give it credit, and it failed to get it. Since Golan Telecom will face the same problem, the Banking Supervision Department should make a more thorough investigation of the problem, and maybe the Antitrust Authority as well, because a refusal to grant half the credit requested by Select Communications appears illogical, assuming that the company is serious and has enough equity.

It is to be hoped that Patrick Drahi's Mirs Communications Ltd. will not fight Golan Telecom on the communications field. In other words, that it does not seek legal action to frustrate and delay Golan Telecom's win. Drahi, who also owns HOT Telecommunication Systems Ltd. (TASE: HOT), and HOT chairwoman Stella Handler could lose a lot if they try to disrupt the Ministry of Communications' effort to promote competition through a tender whose rules were known in advance.

Published by Globes [online], Israel business news - www.globes-online.com - on July 18, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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