Israeli Communications Ministry to Review Rami Levy’s One-shekel Cellular Offer

A ministry official said this deal 'could create cannibalism in the market and lead to chaos'

Rami Levy, founder and chief executive officer of Rami Levi Chain Stores Hashikma Marketing 2006 Ltd.,  poses for a photograph at his company headquarters in Jerusalem, Israel.
Ariel Jerozolimski/Bloomberg

The Communications Ministry announced on Wednesday that it is reviewing an offer made by Rami Levy Communications to its clients to subscribe to its mobile network for just a shekel a month for one year.

A ministry official said this deal “could create cannibalism in the market and lead to chaos.” The ministry is authorized to halt offers when it fears instability. Shares of Rami Levy Communications on the Tel Aviv Stock Exchange fell in wake of the offer.

“We understand that this constitutes serious damage to the market and to competition,” the ministry stated. “We are examining all means at our disposal to prevent this damage.”

The deal was quietly rolled out over a month ago, and is slated to be available solely to Rami Levy’s 300,000 club members through October 16. It is part of an effort to expand the supermarket chain’s membership base.

Having sold chickens for one shekel a kilo, Rami Levy is offering its unprecedented deal by subsidizing its cellular clients. The supermarket chain will pay the difference to Rami Levy Communications.

The cellular package includes 8GB of surfing. Its current basic package of 19.90 shekels ($5.50) per month includes 40 GB of internet surfing, about 5-10 shekels cheaper than the nearest competitor. Rami Levy offered a similar deal in 2013, but only for three months.

The move is not only dramatic but also ramps up competition in the cellular market, which heated up in the second quarter of 2018 with the entry of Xfone into the cellular market with its WE4G brand.