selling cellular lines at a loss in retaliation for TV competition.

The response of Hot Telecommunication Systems Ltd. (TASE:HOT.B1) to the Cellcom Israel Ltd.’s (NYSE:CEL; TASE:CEL) entry into the television market has led Cellcom to file a complaint against HOT with the Antitrust Authority and the Ministry of Communications.

Sources inform “Globes” that following the bargain offered by HOT Mobile Ltd. of two cellular lines for NIS 40, plus provision of Internet (a bargain for couples), Cellcom filed a strong complaint, demanding that HOT Mobile’s bargain be halted, which it said was aimed at disrupting its entry into the television market.

Cellcom entered the television market two weeks ago, and HOT Mobile offered its bargain for couples the same day. HOT Mobile’s campaign came as a surprise, even though Cellcom had taken into account such a scenario.

In its complaint, Cellcom showed why the couples bargain was a money loser from the beginning, and its sole purpose was therefore to detract from Cellcom’s core cellular activity. Cellcom sought to demonstrate to the Antitrust Authority that HOT Mobile’s campaign was an abuse of its monopoly power in the television market.

The couples bargain price includes VAT, meaning that a rough calculation gives a price of NIS 16.90 per line, while each such line adds to the cost that HOT Mobile is paying to Partner for the use of its network and to its regular costs, and the cost of the Internet provider adds a further NIS 20 a month. It therefore emerges in any reasonable calculation that HOT Mobile is selling lines at a loss, and its sole purpose is to damage Cellcom’s cellular business and deliver a message that competition in the television market will intensify the competition in the cellular market.

Cellcom is attempting to convince the Antitrust Authority that HOT Mobile has adopted this improper policy because Cellcom dared to enter the television market and square off against the duopoly of HOT and satellite company DBS Satellite Services (1998) Ltd. (YES). Cellcom also emphasized that HOT Mobile’s bargain came on the same day that Cellcom launched its television services, showing that HOT had planned its measure in advance, and instead of lowering its television prices, had cut its prices for cellular services. This response, which includes an extensive advertising campaign, cannot be devised in a single day, and it is therefore obviously the result of planning designed to halt Cellcom in its tracks, and deliver messages already in the opening stage of competition.

One important question that the Antitrust Authority and the Ministry of Communications will have to assess is the fate of the structural separation applying to HOT when the company is using its cellular subsidiary to weaken its television competitors. Under the terms of its license, HOT Mobile is obligated to operate as a separate company, and its response indicates that it is operating as a communications group using its entire arsenal, in contravention of its license.

HOT Mobile said in response, “HOT Mobile challenged the market, and will challenge the market, with no connection to Cellcom’s measure. We regret the inconvenience caused for Cellcom by the couples campaign. Cellcom should realize that it is in a competitive market, and will operate on the same playing field as everyone else, instead of turning to the Antitrust Authority director general with baseless assertions. Cellcom’s attempt to prevent consumer competition brings us back to the days of limited competition between the veteran players, which is regrettable.”

improving customer service.

In an attempt to cope with the harsh criticism of its services, Hot Telecommunication Systems Ltd. (TASE: HOT.B1) announced today that it is adding 450 customer service staff to its hotlines. Over recent months, the company’s service sunk to unacceptable levels, with thousands of customers complaining daily about service so poor, it can hardly be described in polite language.

Will Hot Telecommunication Systems Ltd. do for the international calls market what Golan Telecom did for the mobile market and significantly lower prices? Hot announced today that it is offering unlimited calls to 31 countries for just NIS 10 monthly to overseas landlines, and the price also includes calls to mobile phones in the US and Canada.

Countries included in the package are: Argentina, Austria, Belgium, Britain, Ireland, Italy, Denmark, Holland, Luxembourg, South Africa, Hong Kong, Hungary, France, Australia, New Zealand, Canada and the US.

Calls to mobile phones in countries other than the US and Canada will cost on average NIS 0.65 per minute.

The package will be branded as Hot 017. TASC consultants advised Hot that Israel’s overseas calls market is worth NIS 900 million annually 66.6% from the private market and 33.3% from the business sector. Over 50% of international calls are from landlines and 85% to landlines.

Hot ISP rivals recommend Bezeq infrastructure

Following HOT Telecommunication Systems Ltd. (TASE: HOT) announcement that it is upgrading Internet access speeds to 100 Mbps, market sources believe that the telecom provider is struggling to compete with Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) because rival Internet Service Providers (ISPs) are recommending Bezeq’s infrastructure to their customers. This is a form of revenge against Hot for entering the ISP market and hurting the existing players.

Sources close to Hot have confirmed to “Globes” that they have clearly discerned this trend as a main reason for the gap between Bezeq and Hot in the landline-telecom infrastructure market.

In 2012, Bezeq succeeded in capturing almost all the growth in the Internet market. At the beginning of the year, Hot had shaken up the market by establishing Hot.Net, its ISP unit with speeds of up to 10 Mbps for just NIS 20 per month. However, despite the low price Hot failed to capture a major market share.

Published by Globes [online], Israel business news – www.globes-online.com – on March 6, 2013

Hot to offer 100 Mbps Internet access for free

Stella Handler leaves Hot

Employees at Hot Mobile Ltd. fear a wave of layoffs at the carrier, following the delisting of its parent company Hot Telecommunication Systems Ltd.The company’s management denies the rumors.

Rumors have been making the rounds at Hot Mobile that it might be operationally merged with Hot Telecommunications, because as a private company, it will be easier for its owner, Patrick Drahi, to merge the companies’ businesses.

Formally, the two companies must be kept separate, which is the position of the Ministry of Communications, but this is a dead letter in practical terms, and the companies are extending their collaboration ahead of turning Hot into a unified telecommunications company.

Employees are talking about mergers in the financial, personnel, logistics, customer service, and other departments. There are apparently no plans to merge the companies’ engineering departments at this time. Sources inform ”Globes” that Hot Mobile’s management has been asked to draw up streamlining plans this year, which may be the source of the employees’ fears.

Hot said in response, “There are no plans for sweeping layoffs.”

Published by Globes [online], Israel business news – www.globes-online.com – on January 2, 2013

Yes, Hot unveil cut-price basic packages