Israel's Golan Telecom Promises Customers Company Will Remain Intact

The pledge comes as subscribers quit amid fears of a collapse due to a failed merger bid.

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Golan Telecom's CEO Michael Golan at the company's offices in Tel Aviv.
Golan Telecom's CEO Michael Golan at the company's offices in Tel Aviv.Credit: Eyal Toueg

In his first public comments since the Antitrust Authority turned down the proposed merger between Cellcom Israel and his Golan Telecom, Michael Golan promised to keep his company intact despite the difficulties it faces.

“We promise to ensure continuous quality service to all the company’s customers at all times,” Golan said in a post on the cellular operator’s Facebook page three weeks after antitrust officials blocked the merger.

The plan, which was first announced in October, called for Cellcom to pay 1.17 billion shekels ($310 million) for Golan. In the days before the antirust decision, Golan was warning that the company might shut down, which would leave its 850,000 subscribers stranded until they could join a rival.

The warning was evidently aimed at influencing regulators, but it also caused subscribers to leave Golan, and last month computer retail chain Bug with its 77 stores stopped acting as the company’s retail outlet. Some 14,000 subscribers left in April, an average of 550 a day.

“It’s been a challenging period for the Golan Telecom team – its workers and management – but I’m confident that we will get through this challenging period together and be stronger,” Golan said. “It’s important to me to present you, our partners on the journey and vision, a complete picture, which sometimes isn’t presented completely, or even worse, truthfully.”

Golan entered the cellular market four years ago after then-Communications Minister Moshe Kahlon eased regulations for new players. But Golan Telecom never succeeded in setting up its own network, relying instead on Cellcom, which Michael Golan blamed on the government and homeowners, for blocking the installing of new antennas.

The company also blamed the Communications Ministry for twice rejecting a plan for a single joint network with Cellcom. Officials have said Golan did not try hard enough to set up its own network, a charge Michael Golan rejected on Sunday.

Short of Golan finding another buyer – an option antitrust regulators suggested when they rejected the Cellcom tie-up – Golan could set up a joint network, as Hot Mobile, another upstart player like Golan, has done with Partner Communications.

A second option is for Golan to turn itself into a mobile virtual network operator, piggybacking but having no ownership stake in a rival’s network. Industry sources have told TheMarker that Golan has begun exploring this option but hasn’t yet raised it with regulators.

If it were to do that, Golan would return the frequencies it was licensed to use and pay a penalty for failing to meet the terms of its license. It would then take a new MVNO license, in effect formalizing the status it has had over the past four years.

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