Golan Loses Customers Over Cellcom Merger

Customers feel as if Golan, known for it's low prices, is abandoning the little guy and selling out to larger corporations.

Tali Mayer

Losing subscribers even as it tries to navigate an antitrust and public-relations minefield to merge with Cellcom Israel, Golan Telecom offered even cheaper cellphone and broadband service on Wednesday.

The price — just 29 shekels ($7.47) a month — is in line with Golan’s reputation as the industry upstart that has forced rivals to lower their prices since the cellphone market was liberalized in 2012. Shares of Partner Communications (Orange) tumbled 4.6% to 17.50 shekels in Tel Aviv Stock Exchange trading and Cellcom lost 2.4% to 27.59.

Golan said it was offering new subscribers who sign up before December 17 a guaranteed monthly rate of 29 shekels that includes calls, text messaging, international calls to 56 cities and up to 10 GB of mobile data. Up to five additional lines are available for just 19 shekels a month, the company said.

The new plan was rolled out less than a month after Cellcom agreed to buy Golan for 1.17 billion shekels, arousing concerns among regulators that it will undermine competition and end up raising cellphone rates. The combined company would control 40% of the market.

The announcement has hurt Golan’s reputation as the little guy defending consumers from high cellphone costs, and Michael Golan, the company’s principal shareholder, was back on the airwaves yesterday promising that he wasn’t abandoning the public.

TheMarker has learned that since the prospective merger with Cellcom was announced, Golan has been losing subscribers for the first time in three years, albeit at a relatively slow pace. The company has gained 21,400 new subscribers and lost about 27,000 for a net loss of 5,600. All told, Golan has about 900,000 customers.

With the industry worried about the shake-up and consumers about rising cellphone costs, other players are considering long-term, low-price packages like Golan’s to lock in subscribers. Mobile 012, Partner’s low-cost brand, reportedly has a two-year deal like Golan’s ready to launch.