Pelephone and Cellcom were expected to submit an offer for the acquisition of Golan Telecom by Thursday at 5 pm. Market insiders believe HOT also entered the bidding, but the company has neither confirmed nor denied this. However, given that HOT submitted an offer a few weeks ago at an earlier stage, it is likely the company will bid for Golan.
HOT has the best change of receiving the permission of the regulator - likely a primary consideration for the company - while the odds are not in Pelephone or Cellcom’s favor.
For the current players in the mobile telecommunications sector, the Golan acquisition offers massive advantages for the future. Foremost is that this might be the final acquisition that the regulator will tolerate; whoever buys Golan will reduce the number of players to four, and it is unlikely the regulator will accept a merger that reduces the market back to three players.
Another central reason to purchase Golan: to end the price war that has been radically reducing call rates, and has been epitomized by Golan.
As previously reported in "Globes", Cellcom has the best odds of completing the deal because Golan is hosted on its network and owes it more than NIS 350 million - a debt that will transfer to whichever company acquires the virtual operator. Furthermore, Cellcom will not have to switch Golan’s customers over to its network, unlike its competitors who would be forced to undergo the complex transition.
Even if Golan signs an agreement with Cellcom or Pelephone, it is highly unlikely that the deal will be completed in the near future. It is far more likely that it will not be approved because of objections from the Anti-trust Authority.
All the same, if Golan sells to Cellcom, the company will have earned some breathing room - as it will be able to postpone its repayment of the debt, which gives it an incentive to sign a deal with Cellcom now and gain time.
Published by Globes [online], Israel business news - www.globes-online.com - on October 29, 2015
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