Patrick Drahi's win in the mobile carrier tender on Monday, further strengthens his foothold in Israel as a telecommunications tycoon. He will ride the success of HOT Telecommunication Systems Ltd's (TASE: HOT) triple play by adding mobile services to HOT's cable TV, Internet, and telephony services. Drahi sees great business potential in Israel and he wants to live here.
"Not my family, because I still have young children, but I want to reside here immediately, he told "Globes" in an interview about his future plans, following Mirs Communications Ltd's win in the tender for GSM 3G bandwidth.
"Globes": How do you plan to finance setting up of the network?
Drahi: "65% of the population already buys something from us through HOT. If you check our discount for triple play, you'll discover that its 30% cheaper. I'm not worried about financing. We'll finance it with Mirs' cash flow."
Will HOT distribute a dividend to finance the investments?
"I don’t know. It's not an immediate plan. The plan at the moment is to invest in 3G and fiber optics."
How much will you invest?
"NIS 2 billion in mobile."
What discounts do you intend to offer in mobile?
"Most of all, we'll provide service in a comprehensive package. It's important the offer will be clear, because if I ask you today what you pay for mobile, you don’t know. We'll make the services clear, otherwise we'll lose customers."
Do you know that Israelis hate the mobile carriers?
"It's fashionable. Sometimes you hate them, other times it's something else. Previously it was the banks; now it's the carriers. It seems to be too expensive. I think that customers often discover that they're charged for things that they didn’t know they used."
What market share do you want?
"We want to reach a lot more than 7%, the minimum at which we won't have to pay money."
Was the tender a life-or-death matter for Mirs?
"I wouldn’t say that, but it's an important challenge. We're talking about a bid market in Israel - NIS 35 billion - and we want to earn more than anything, in both landline and mobile."
What effect do you think your entry will have?
"We checked things out and we saw how we could have an effect. We checked with market research groups to find out at what discounts customers would be willing to switch, and found that at a discount of over 50% we would have been perceived as idiots. That's why the discount will be around 30-35% of the current price."
When will HOT and Mirs merge?
"We waited for the license before starting the process, and we're now beginning it. It doesn’t depend only on me, but on a lot of market factors."
Will the carriers offer bundled packages in 2012?
"Yes."
Will Mirs be rebranded?
"We checked and found that Mirs has a strong presence in the professional-institutional market, but not in the private market. HOT is very well known. It didn’t have a good reputation in the past, but that has now greatly changed, so I think that the HOT brand is a good one."
Might it be something called HOT Cellular?
"I don’t know yet, but something like that. I like the brand and the color, but I'm not a marketing man. The marketers will decide."
Commenting on the appointment of Stella Handler, Drahi said, "She will become HOT's chairwoman in a month." However, he declined to give a date for Mirs. "If I owned 100% of HOT and 100% of Mirs, things would be a lot simpler. HOT is a public company, so I am cautious about setting dates."
As for rumor's about the shape of his business in France, Drahi said, "Just as I don’t talk with journalists when things are good, I don’t talk when things are bad. Business is very good in Belgium and France. I read stupid articles. I have zero personal debt, and my companies' debt is normal. We're making a lot of money. My core business, in terms of income, is in France, but the potential is in Israel because it's growing much faster."
Published by Globes [online], Israel business news - www.globes-online.com - on April 13, 2011
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