Cellcom mulling Golan acquisition

Approval is far from guaranteed since a merger might hurt consumer prices, however,

Shadowy figure uses cell phone (illustrative) (photo credit: INGIMAGE)
Shadowy figure uses cell phone (illustrative)
(photo credit: INGIMAGE)
A day after Golan Telecom announced that it was open to an acquisition, Cellcom on Thursday announced it is reviewing the possibility of purchasing it.
Both companies used very tentative language in their releases. Cellcom, in its statement registered with the Tel Aviv Stock Exchange, said it was reviewing the idea “following an invitation by Bank Rothschild, representing Golan Telecom’s shareholders.” But it quickly noted that “there is no assurance that the company will make an offer to purchase Golan Telecom nor as to the execution of such a sale.”
Cellcom also said it was not required to report the information.
Golan also was noncommittal in its announcement.
“Shareholders have given an investment bank the mandate to evaluate and explore options that could lead to a sale, acquisition, merger, but could also leave Golan Telecom independent,” the company wrote on Wednesday.
Golan, one of the “virtual operators” that came into the market in 2012 after a cellular reform allowed new companies to piggy-back off existing infrastructure, has signed up 850,000 users. It is preparing to wade into the “triple” market, offering deals combining television, landlines and Internet.
A merger with Cellcom could make economic sense given that Golan already relies on Cellcom’s infrastructure.
The tentative and unprovoked nature of the announcements has led some to speculate that the companies may be trying to pressure the Communications Ministry, which is continuing steps to regulate the markets in which both companies are active.
The ministry has withheld comments about the implications of a merger until a concrete plan is submitted.
“As long as the request has not been submitted to the minister to change the standing of Golan Telecom, the company is required to continue complying with the terms of the license they received,” the ministry said.
A merger would also be subject to approval by the Antitrust Authority, which said it would not comment on the possibility until an official request was put forth. However, given that a market consolidation might hurt consumer prices, approval is far from guaranteed.