Israeli Business’ Robin Hood Is More Like a Carpetbagger

Michael Golan, who wants to sell his cellphone company to a big player, likes competition a lot less than we thought he did.

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Michael Golan brings Free Mobile’s approach to Israel.
Michael Golan brings Free Mobile’s approach to Israel. Credit: Shuka Cohen

He arrived three and a half years ago, clad in jeans and a T-shirt, and we swooned. He spoke with a soft French accent and we fell in love. He slashed the prices of mobile communications and we were maddened with joy. Our Robin Hood had arrived to take from the rich and give to the poor. Indeed, high time we “stopped being suckers!”

But Michael Golan, author of that slogan, must have rolled with laughter. He knew he had come to take a ride on our backs, like in the third world, where you make promises, sign agreements and walk away — with treasure in hand.

At first it made sense — a charge of 99 shekels a month ($25.50). Later the price dropped to 59 and then 10 and then even two shekels for a family subscription. Any day, instead of us paying for cellular service, we’d be receiving checks from him.

The rates made no sense. They wouldn’t let the company invest in building a network, making technological progress and expanding services over time.

But Golan wasn’t concerned about any of that. He had come for a quick fling, a sting. He attracted customers to Golan Telecom and when their number reached the hundreds of thousands the company was big enough to be sold to one of its older rivals, if only to stop the hemorrhaging.

And that’s what happened. Cellcom offered the insane sum of 1.17 billion shekels for Golan Telecom; with debt at about 350 million, the real price tag was more like 1.5 billion shekels. That’s an absurd price with no economic merit.

Maybe Cellcom CEO Nir Stern thinks he can jack up Golan customers’ rates without them decamping. That would be a big business mistake. Or maybe he doesn’t think the deal will come off but the news reports will hurt Golan Telecom’s credibility and operations, perhaps fatally.

Meanwhile, Golan sounds confident. He tells the press that the merger with Cellcom will boost competition. It’s like Bank Hapoalim saying it’s buying Bank Mizrahi-Tefahot to spur competition among banks. Is there no limit to charlatanism?

Golan is counting on Benjamin Netanyahu (who’s not only prime minister but communications minister and economy minister) to support the deal, for two reasons. One is to help his friend Shaul Elovitch, who owns Bezeq, which owns Pelephone, a rival mobile operator.

The other is to sting Finance Minister Moshe Kahlon, whose reputation rests on his reform of the cellular telephony industry when he was communications minister. Netanyahu knows that the moment Cellcom swallows Golan Telecom, cellphone rates will rise and Kahlon’s reform will be dead in the water.

Netanyahu would love that, seeing as he views Kahlon as a rival to be diminished and humiliated. The fact is, the director general of the Communications Ministry, Shlomo Filber, recently spoke in favor of the merger and Filber wouldn’t say a syllable without an eye fixed on his master.

Now only two people remain who might save us from this bad merger: the antitrust commissioner and the finance minister. Any antitrust commissioner worth his salt would quash the deal because it diminishes competition and raises prices.

But if that doesn’t pan out, there’s Kahlon. He’ll have to tell Netanyahu: Either cancel the merger or cancel me. Either cancel the merger or find a new governing coalition.

Kahlon knows the merger spells death for his cellular reform. He must choose the right solution – withdraw the license from Golan and sell it to a new investor who really does love competition.

I dream of seeing Michael Golan, clad in jeans and a T-shirt, climb aboard his plane at Ben-Gurion Airport with a one-way ticket and no cash in his pocket. After all, he taught us not to be suckers.

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