Israel's Pelephone Offers to Buy Smaller Rival Golan Telecom

Pelephone offer could be the start of a consolidation trend in Israel's mobile sector.

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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

REUTERS - Pelephone, Israel's third-largest mobile phone operator, has submitted an offer to buy smaller rival Golan Telecom that could be the start of a consolidation trend in the country's mobile sector.

Pelephone's parent company, Bezeq Israel Telecom, announced the offer on Sunday in a statement to the Tel Aviv Stock Exchange but gave no financial or other details.

In August, mobile market leader Cellcom said it was reviewing a possible purchase of newcomer Golan after Golan had said it was exploring options, including a possible sale of the company.

Israeli financial newspaper TheMarker also reported that HOT Telecom was in talks to buy Golan, which is owned by French businessman Michael Golan and his partner Xavier Niel. Israeli media said Golan's asking price is 1 billion shekels ($259 million).

HOT is a subsidiary of European telecoms group Altice , controlled by Frenchman Patrick Drahi.

Golan and HOT were not immediately available for comment.

Israel's mobile phone industry was shaken up in 2012 with the entry of six new operators, including Golan and HOT, sparking a price war that hit subscriber numbers, revenue and profit at incumbents Cellcom, Pelephone and Partner Communications.

Two virtual operators have already merged,

In the past three years, HOT has gained about 1.2 million subscribers and Golan 900,000. Pelephone has about 2.5 million subscribers.

Cellcom and Golan are negotiating with the Communications Ministry over a 3G and 4G network-sharing agreement.

Cellcom is deploying 4G services and Golan would need to buy half that network - at a cost of around 350 million shekels - to meet regulatory requirements.

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