HOT Mobile Signs 10-year Network Hosting Agreement With Golan Telecom

Cellular rivals say that the deal requires changes to the terms of Golan's license - which won't be approved by the Communications Ministry and the Anti-trust Authority.

Amitai Ziv
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Michael Golan, the owner of the eponymous Golan Telecom.Credit: Moti Milrod

Cable company HOT informed the Tel Aviv Stock Exchange on Friday that it had signed a 10-year agreement to host Golan Telecom on its network.

The new arrangement will turn Golan into a type of virtual network operator. The change will likely require a change in the terms of Golan's license, which may not be forthcoming.

Golan previously piggy-backed on the Cellcom network, but the state Antitrust Authority rejected a merger of the two companies in April. Golan owes Cellcom 600 million shekels for the use of its network.

"HOT Mobile has reached a non-exclusive hosting agreement with Golan Telecom for the use of the cellular network that serves Hot Mobile," the company said in its statement to the stock exchange.

"In terms of the agreement, Golan will be able to provide its subscribers with cellular voice services, surfing, text messaging, multimedia messaging and the like."

Regarding Golan's debt to Cellcom, the statement said: "In the framework of the agreement, HOT will make sources of finance available to Golan, if and when necessary, in order to realize certain liabilities of Golan Telecom for mobile services provided in the past, in the format, manner and scope specified in the agreement.

"For that purpose, HOT Mobile will apply for a line of credit from a company owned by the controlling shareholder (Patrick Drahi.) Golan will set aside the actual sum that is transferred plus interest in accordance with the conditions stipulated in the agreement."

None of the other relevant details of the deal – including the financial scope of the hosting agreement, the technological model, the size of the loan and conditions of the loan – were included in the statement to the stock exchange.

The director general of the Communications Ministry recently expressed his opposition to the idea of Golan becoming a virtual cellular operator. The other cellular companies are likewise opposed to the idea and have prepared the ground for legal action on the issue.

There are at least four other groups that are interesting in acquiring Golan as an ongoing concern with its own infrastructure.

Golan Telecom acknowledged in a statement that it had signed a 10-year agreement with HOT Mobile, during which period it would use the services of the HOT network.

"Golan Telecom will continue to be entirely independent and will continue to lead competitiveness in the communications world. The long-term agreement enables Golan Telecom to continue serving its subscribers with the most lucrative offers, the best service and the most advanced technology."

Sources in rival company Partner said that the agreement means Golan will become a Mobile Virtual Network Operator "which is contrary to the conditions of its license."

They added that the deal is likely to fail because it is contrary to the policy of the Communications Ministry, the Antitrust Authority and the treasury.