Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Golan Telecom Ltd. are trying to convince the Ministry of Communications that the network merger agreement they have signed is no different in substance from the agreement between Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) and HOT Mobile Ltd. The aim is to prevent legal problems arising if mobile carriers complain that the agreement makes matters too easy for Golan Telecom. Both companies are working hard to obtain approval from the Ministry of Communications as soon as possible, even though it initially rejected the network meger agreement.
The main claim by Cellcom and Golan Telecom is that the agreement meets the Ministry of Communications' policy, which sets general guidelines, and that the two companies want to set up a network making equal investments as partners. But because Golan Telecom is relatively new in the market, changes are required as part of cooperation with Cellcom regarding the 3G network.
The essence of the problem focuses apparently on the question of ownership and the services that Golan Telecom will purchase from Cellcom's 3G network. Both companies claim that because Hot Mobile is a more veteran company (working on the base of what was formerly Mirs), and larger than Golan Telecom, then its agreement does not have to be identical to Partner and Hot's network merger agreement. In that agreement the issues of joint ownership and investments are more sharply and clearly defined.
As the Ministry of Communications grants and publishes licenses for merged networks, legal problems could arise if it turns out that Cellcom and Golan's license is substantially different from that of Hot Mobile and Partner.
Market sources believe that Golan Telecom prefers to wait until the new government appoints a new Minister of Communications and then present the agreement for approval. Golan Telecom has already dismantled most of its 3G antennas and if the agreement is rejected and additional requirements are made of it for 3G investment, this could pose a very serious problem.
Published by Globes [online], Israel business news - www.globes-online.com - on April 26, 2015
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