Cellcom, Israel's largest telecommunications firm, has entered into a binding memorandum of understanding to acquire mobile network rival Golan Telecom.The deal, valued at NIS 590 million ($172.5m.), was signed on Tuesday. A total of NIS 413m. ($120.8m.) will be paid upon completion of the deal and a further NIS 177m. ($51.8m.) will be paid within three years. Cellcom defeated Bezeq Israel Telecom's Pelephone unit in the race to acquire Golan Telecom, with the latter submitting a bid to buy the company for NIS 710m. ($207m.). Established in 2012, Golan Telecom has been a subsidiary of Electra Consumer Products since April 2017.Avi Gabbay, chief executive officer of Cellcom, said the acquisition will enable the company to make "significant investments" in the field of communications for the benefit of the Israeli public."The difficult situation that has prevailed in recent years in the telecommunications market requires action that will strengthen Cellcom and the entire telecommunications market," said Gabbay, who was appointed CEO last month."I believe that the strengthening of Cellcom, following the acquisition, will enable us to strengthen our position as a competitive player in the market and will serve all consumers in Israel. Cellcom and Golan, who share a common network, are a natural partner and I am sure that the connection between the two companies will produce synergy that will contribute to competition."The two parties will now negotiate a detailed agreement for the acquisition, but are bound by the memorandum of understanding until December 31.The acquisition is the latest in a likely trend of consolidation in the mobile phone sector, as revenue has plunged and companies are barely profitable in the wake of intense competition.Responding to intense competition, Cellcom announced in September 2019 it would be carrying out a “comprehensive restructuring plan” of the company. Measures include a “substantial reduction” in manpower and broad cost-cutting measures.Last month, Altice Europe’s ‘HOT’ subsidiary — Israel’s lone cable company — offered to buy Partner Communications, the country’s second-largest mobile operator.Israel’s mobile phone industry was shaken up in 2012 with the entry of new operators, sparking a price war. A calling, text and surfing package can be had for as little as $6 a month. With some companies barely profitable, many Israeli firms have so far baulked at investing in a new 5G network.Reuters contributed to this article.