Golan Telecom Ltd. shook up the cellular market today by launching an unprecedented bargain campaign. The sale of a first line will cost NIS 37, and each additional line will cost only NIS 2, up to a total of six lines. A family with three children can obtain a cellular package with three gigabytes for each line and unlimited calls and messages for only NIS 45 a month, while the price for maximum use of six lines will be NIS 47. The campaign is a response to HOT Mobile Ltd.'s campaign, announced on Monday, which offers only two lines for NIS 40, and is valid for only two weeks.
There is no question that the telecommunications market as a whole is experiencing one of the most turbulent periods in its history. No one expected such intense competition in the cellular market, and it appears that anyone who thought that Cellcom Israel Ltd.'s (NYSE:CEL; TASE:CEL) entry into the television market would be pass quietly did not correctly assess the responses of Hot Mobile and Golan Telecom.
Cellcom is seeking to compete head on with the core television business of Hot Telecommunication Systems Ltd. (TASE: HOT.B1), Hot Mobile's parent company, and Hot Mobile therefore responded with its two-line/NIS 40 bargain. Golan Telecom, which is competing directly with Hot Mobile in the cellular market, responded immediately with an offer that is simply turning up the market upside down. The coming months can be expected to feature a no-holds-barred brawl of a kind never before seen.
The biggest damage will be suffered by the older companies, which will have to cut their prices to compete with the offers by Golan Telecom and Hot Mobile. It appears that even the predictions that 2015 would be a tough year were far short of the mark.
It is believed that Cellcom's bargain television campaign, which features a NIS 198 price for a television package plus three cellular lines, was the trigger for a sharp response from Hot Mobile, because Cellcom combined television and cellular in a single package for the first time in order to prevent customer churn. This is probably the reason why Golan Telecom, which operates exclusively in the cellular market and has no television business at the moment, responded with such an extreme measure.
Published by Globes [online], Israel business news - www.globes-online.com - on December 31, 2014
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