Owner of Golan Telecom Is Confident Israel Will Not Lead the Company to Bankrupt-report

Cellcom agreed in November to buy Golan but there are objections from politicians and the public that are afraid the deal will increase the prices.

Xavier Niel at the e-G8 Internet Forum in Paris, May 25, 2011.
Bloomberg

REUTERS - French telecoms tycoon Xavier Niel, whose Israeli mobile network operator Golan Telecom is facing a battle to win approval for its takeover by bigger rival Cellcom, said in an interview published on Tuesday that he did not believe politicians would let the company go bankrupt instead.

Cellcom, the country's largest mobile operator, agreed in November to buy Golan for about $300 million but the deal has met with objections from politicians and the public, who say the deal would lead to higher prices.

Prime Minister Benjamin Netanyahu has also voiced his opposition to the deal.

"There has never been a bankruptcy of a cellular operator in an OECD country and I don't expect Israeli politicians want to reach this situation," Niel was quoted as saying by TheMarker financial newspaper on being asked whether Golan would be forced into bankruptcy if the deal was not approved.

Golan launched its service in 2012 after being granted one of several new network licenses issued to increase competition in the national cell phone market and stop what the state saw as a trio of companies inflating prices.

Golan has since taken about 10 percent of the market but analysts say industry consolidation is now inevitable to eliminate a duplication of costs in a market where profits have been wiped out.

Niel, who controls Golan with French business partner Michael Golan, said $200 million was invested in Golan and that his return from the sale would be small as he had not expected to sell at this stage.

Nevertheless, he said he has no regrets about investing in Israel, noting he has invested in over 30 Israeli start-ups and hopes to reinvest the money he receives from the sale.

"I understand there are other sectors in Israel that need more competition and I'm interested in discussing this with politicians," said Niel, one of France's richest men who founded low-cost internet and mobile telecoms service provider Iliad.

Niel said Golan had no choice but to merge with another player since a plan to share Cellcom's network was not approved by regulators while municipalities in Israel refused to approve the installation of more antennas needed to expand its own network.

Niel also said that consolidation was taking place in other countries, without causing prices to rise and aimed at strengthening the finances of the remaining operators to enable more investment to be made in faster networks.