Chinese Corporation Wants to Regain Control of Israeli Partner Cellular Firm

China's Hutchinson is waiting for approval from Israel’s regulator for a strategic, long-term investment in Partner, some 10 years after it sold its controlling share in that company for billions of shekels in profit

Hutchinson's Li Ka Shing speaks at the Technion, September 30, 2019.
Ofer Vaknin

Chinese corporation Hutchinson is planning to return to Israel’s cellular communications market by taking control of Partner again, some 10 years after it sold its controlling share in that company for billions of shekels in profit.

Hutchinson is waiting for approval from Israel’s regulator. This time, it is planning a strategic, long-term investment in Partner.

Previously, industry players had predicted that Hutchinson would sell off the shares in Partner it had received from previous controlling shareholder Haim Saban.

Hutchinson, controlled by billionaire Li Ka Shing, believes in Partner’s business potential and intends to invest in the company. It has not yet stated what its strategy will be.

When this happens, four of Israel’s major cellular communications companies will be controlled by non-Israelis. In early December, control of Bezeq Telecommunications, which owns Telephone, is scheduled to transfer to U.S. investment fund Searchlight, with David Furer as a minority partner; the controlling shareholder in cellular communications company Cellcom is IDB, owned by Argentinian businessman Eduardo Elsztain; and Hot is controlled by French businessman Patrick Drahi.

Control of Partner passed from Saban to Hutchinson this week after the president of the Tel Aviv District Court, Judge Eitan Ornstein, approved Hutchinson’s request to let it cash in on its collateral over 1.06 billion shekels in debt that Saban owes the Chinese company. The shares Hutchinson received from Saban - 30.4% of Partner - are currently worth 737 million shekels.

Hutchinson initially gave the loan to previous Partner owner Scailex, controlled by Israeli businessman Ilan Ben-Dov, when it bought Partner from him. Saban took the loan onto himself when he acquired Partner. He was due to repay Hutchinson at the beginning of 2020.

This is a challenging time for Israel’s cellular communications companies: The companies’ new owners will need to decide whether to merge with others in the field, and will also need to invest in 5th generation cellular networks and take efficiency measures.

Two weeks ago, Israel’s security cabinet decided to establish a mechanism to monitor Chinese investments, following three years of debate and U.S. pressure. The proposal calls for creating a body only with the power to advise on prospective foreign investments in Israeli companies.

With reporting by Noa Landau.