Ministry nixes Cellcom-Golan network merger

ola — Mon, 30 Mar 2015 07:20:30 +0000

The Ministry of Communications does not want to

release Golan Telecom from its investment

obligations.

The networks consolidation agreement between Cellcom Israel Ltd.(NYSE:CEL; TASE:CEL) and Golan Telecom Ltd. is in trouble, with the Ministry of Communications demanding changes in it. The Ministry sent a letter to the two companies last Thursday notifying them that the agreement did not conform to its policy document concerning consolidation of networks, and the company would therefore have to make changes in their agreement.

This is the second time that the Ministry of Communications has intervened in an agreement that runs counter to its policy. The agreement between the two companies attempted to meet the Ministry’s requirements, but the Ministry apparently did not accept the fact that the venture releases Golan Telecom from the obligations imposed on it as part of its selection in the 3G tender when it entered the market, and focuses excessively on the 4G network. The Ministry of Communications is demanding that the networks consolidation agreement between the companies prove that Golan Telecom is bearing the burden of the investments required of it for the 3G network, as well as the 4G network.

Like HOT Mobile Ltd., Golan Telecom undertook to set up a 3G network as part of winning the frequencies tender in 2011, when it entered the market. For various reasons, the companies had a great deal of difficulty in meeting the obligation to set up the network, but in general, the Ministry of Communications also realized that at the current time, this task could not be accomplished, due to the difficulty in establishing sites.

Outgoing Minister of Communications Gilad Erdan initiated the constriction and consolidation of networks, aimed at making it possible to establish only three networks in Israel, with ownership divided among the operators. In other words, Golan Telecom and Hot Mobile will have to convert the investment in 3G that they undertook into investment in 4G in the form of a joint network owned in equal shares together with the veteran operators.

In practice, the agreement that released the two new companies from their obligation to set up a 3G network is very generous to them; it enables them to substantially reduce the investment required of them, and to convert it to into a generous and broad consolidation agreement with the veteran operators.

The agreement between Hot Mobile and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) is very close to gaining approval, but it turns out that the Ministry of Communications believes that the agreement between Golan Telecom and Cellcom needs changes, because in the Ministry’s opinion, the agreement does not really convert Golan Telecom’s 3G investment into a joint 4G network, and the Ministry is therefore demanded that the agreement be revised to take this into account.

Keep in mind that the main complaint against Golan Telecom is that the company is in effect becoming a virtual operator on the Cellcom network, and that the Ministry of Communications is thereby releasing Golan Telecom from the obligations imposed on it as a full cellular operator that maintains and operates a network. The chief criticism of the Ministry is that it is allowing Golan Telecom to plow into the market without the burden of investment and setting a network, with all the resulting consequences, thereby enabling the company to sell cellular services at such low prices and imperil the veteran companies. p>Published by Globes [online], Israel business news - www.globes-online.com - on March 29, 2015

Partner, Hot Mobile sign network sharing agreement

ola — Mon, 11 Nov 2013 07:19:39 +0000

The carriers will set up a subsidiary that they will own in equal

shares, which will operate and develop a cellular network.

On Friday, Orange franchisee Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) announced a network sharing agreement with Hot Mobile Ltd.As “Globes” reported, under the agreement and subject to regulatory approval, the carriers will set up a subsidiary that they will own in equal shares, which will operate and develop a cellular network by pooling their radio access network infrastructures to create a single radio access network. Each company will retain and operate its own core network and will be responsible for providing cellular telecommunication services to its own customers, including customer service, value-added services, marketing and sales. The agreement is due to come into effect by the end of 2014. >p>Under the long-term 15-year agreement, Partner and Hot Mobile have signed an interim rights of use agreement, under which Partner will grant Hot Mobile, when possible, rights of use of its cellular network in order to supplement Hot Mobile’s network coverage.

Since it began operations, Hot Mobile has been hosted on Pelephone Communications Ltd.’s network, and the announcement of the network sharing agreement between Hot Mobile and Partner has important consequences for Pelephone. Pelephone has earned tens of millions of shekels per quarter from hosting Hot Mobile, and these profits will now go to Partner.

Minister of Communications Gilad Erdan said in response, “I welcome this agreement. It will reduce the number of antennas nationwide. There is no justification for the deployment of five separate networks in a small country like Israel. Together with the development of telecommunications infrastructures in Israel, other considerations should be taken into account relating to people’s quality of life and the character of public space. The network sharing agreement will optimally foster competition, enable full exploitation of the spectrum, and save money to the benefit of consumers. The Ministry of Communications under my leadership will continue to encourage competition and promote the deployment of advanced telecommunications infrastructures.”

Hot Mobile chairman Herzel Ozer said, “I welcome the agreement between Hot Mobile and Partner, which is an important milestone in the mobile market, and is in line with Minister of Communications Gilad Erdan’s policy on sharing sites and frequencies. This step will enable us to move forward and launch 4G services and will position Israel alongside the most advanced countries in the world. We intend to continue investing in the development of infrastructures, while keeping the best prices for our customers.”

Partner CEO Haim Romano said, “We are heeding the call of Minister of Communications Gilad Erdan for cooperation between the operators in order to reduce the number of network sites and to combine, as much as possible, the cellular operators’ infrastructures, taking into account environmental protection considerations and public opinion regarding network sites. This cooperation, the first of its kind in Israel, will increase competition in a manner that will benefit the consumer, will develop advanced cellular infrastructures and enable maximal utilization of the existing spectrum for the benefit of launching the fourth generation services. In addition, the cooperation will address the surging demand for mobile data services, will significantly improve the customer’s experience and will enable him to enjoy the most advanced services in Israel.”

Pelephone said in response, “Pelephone and Hot have an exclusive nationwide roaming agreement through the end of 2014, and we expect Hot to honor the agreement.”