Cellcom in talks to buy Golan Telecom

Avi Gabbay  / Photo: Cadya Levy

Such a deal would have the further advantage for Cellcom of blocking a Hot-Partner merger.

Israeli telecom Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) is in talks to buy mobile phone operator rival Golan Telecom. "Globes" was the first to report last week that Cellcom would open talks to acquire Golan, in part to thwart the efforts by HOT Telecommunication Systems Ltd. (TASE: HOT) to buy Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR).

Market sources believe that the Israel Competition Authority and Ministry of Communications would only be prepared to sanction one merger because of the already relatively small number of players in Israel's telecom sector. A Cellcom merger with Golan would also be more acceptable to the regulators because it would be a smaller threat to reduced competition. The regulators fear that a Partner-Hot merger would create a duopoly in which the newly formed company and Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) dominate the market.

A Cellcom merger with Golan also makes sense because both operators already share the same network. However, it would make life difficult for Xfone We4G, the third partner that shares the network, which would be required to pay half the cost of network usage rather than one third.

Xfone has already sent out feelers about a merger with Cellcom. But Cellcom, which is now led by CEO Avi Gabbay, the former Labor party chairman, would prefer to buy Golan, which has many more subscribers.

Published by Globes, Israel business news - en.globes.co.il - on February 10, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Avi Gabbay  / Photo: Cadya Levy
Avi Gabbay / Photo: Cadya Levy
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