Israeli mobile phone operator Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) plans keeping Golan Telecom as a brand and allow the rival company that it has acquired to continue operating independently. Cellcom has reached the conclusion that Golan Telecom is a brand valued by the public and it therefore makes sense to keep it operating.
Cellcom announced yesterday that it is acquiring Golan Telecom for NIS 590 million cash. Cellcom will also wipe out the NIS 130 million debt that Golan Telecom has to it. Golan Telecom has NIS 67 million cash that will remain with the company's previous owners Electra Consumer Products (TASE: ELEK).
Market sources say that Cellcom CEO Avi Gabbay realizes that it has much to learn from Golan Telecom such as its information systems, which are a major source of knowhow. Golan also has a quality workforce that can serve as a model for Cellcom but there will be streamlining in core systems and international roaming. The two companies already share a network. Xfone, the third partner in the network may now be required to pay more.
Cellcom and Golan Telecom will submit an application to the Israel Competition Authority and Ministry of Communications for approval of the merger. The merger gives Cellcom a 35% market share and 3.5 million subscribers, making it Israel's largest mobile phone operator. Nevertheless, the merger is expected to be approved.
Published by Globes, Israel business news - en.globes.co.il - on February 20, 2020
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