Golan, HOT request cartel exemption

Golan Telecom
Golan Telecom

The companies agreed that Golan Telecom would use HOT Mobile's cellular network instead of Cellcom's.

Golan Telecom Ltd. and HOT Mobile Ltd. will submit a request to the Antitrust Authority next week for an exemption from the rule against agreements in restraint of trade. The request concerns an agreement signed by the companies for Golan Telecom's use of HOT Mobile's cellular network, instead of Cellcom Israel Ltd.'s network (NYSE:CEL; TASE:CEL). At the same time, Golan Telecom will submit a request for a mobile virtual network operator (MVNO) license to the Ministry of Communcations.

The reason that the agreement is being submitted for consideration to the Antitrust Authority is that HOT Mobile will probably grant Golan Telecom a loan to cover the latter's debts to Cellcom. Under Golan Telecom's hosting agreement, HOT Mobile has agreed to lend Golan Telecom hundreds of millions of shekels to cover those debts.

The debt to Cellcom is NIS 600 million, but Cellcom is demanding NIS 900 million for discounts received from Cellcom over the years in acting as the host for Golan Telecom's services, plus interest and linkage charges. There is no chance that Golan Telecom will agree to pay what Cellcom is asking.

The loan Cellcom has agreed to grant to Golan Telecom could be construed as an agreement in restraint of trade between competitors. There are also clauses in it that give rise to concern about damage to competition, and approval from the Antitrust Authority is therefore being sought.

The problem with the Ministry of Communications is more complicated, because there is no precedent for a cellular operator itself asking to become a virtual operator. Golan Telecom has a cellular license that requires complete deployment of antennas within seven years, with deployment being spread through that period. Golan Telecom can receive roaming services from an existing inland operator during that period before its deployment is completed.

The 4G frequencies tender changed everything, however. Instead of inland roaming services, Golan Telecom's obligation is being converted from the deployment of sites to sharing of infrastructure. Golan Telecom is now expected to file a request for an MVNO license, through a consolidated license (a different license for communications services, such as international calls service), which it has.

The Ministry of Communications' problem is that Golan Telecom has to return its cellular operating license and conclude the procedures related to it returning frequencies, fines, guarantees, etc. before it receives an MVNO license, because it wants to transfer its customers, who are currently in a defined framework, to a new framework.

Published by Globes [online], Israel business news - www.globes-online.com - on June 23, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Golan Telecom
Golan Telecom
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