"The aggressive prices and determination by the bidders in the mobile carriers tender highlights the size of the competitive threat against the current carriers," says Leader Capital Markets following the results of yesterday's tender, which was won by Mirs Communications Ltd. and a target=new href=http://www.018.co.il/en/about.asp>018 Xfone Communications Ltd.
Mirs, owned by Patrick Drahi, paid NIS 710 million for the 3G GSM bandwidth, and 018 Xfone, owned by Hezi Bezalel, paid NIS 705 million. The prices paid are triple capital market estimates of NIS 200-250 million.
Leader is not optimistic about the mobile market, warning that it faces upheaval and that profits will plummet. "Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) will be the main victims of the pending change, as their mobile business is, and will probably continue to be, their core activity even after the merger with NetVision Ltd. (TASE: NTSN) and 012 Smile Telecom Ltd., respectively."
Leader says that the effect on Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ), which wholly owns mobile carrier Pelephone Communications Ltd., will be less because of the company's versatility and diversity.
Leader advises reducing exposure to Israel's telecommunications shares.
The share price of Orange franchisee Partner, controlled by Ilan Ben Dov, rose 0.2% on Nasdaq yesterday to $19.03, giving a market cap of $2.96 billion, but fell 3.2% by early afternoon on the TASE today to NIS 63.69. The share price of Cellcom, controlled by Nochi Dankner's IDB Holding Corp. Ltd. (TASE:IDBH), closed at $32.37 on the New York Stock Exchange yesterday, giving a market cap of $3.22 billion, and fell 4% on the TASE to NIS 106.70.
Bezeq's share price fell 1.7% by early afternoon to NIS 10.15, giving a market cap of NIS 27.82 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on April 12, 2011
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