Golan Telecom declared wireless tender winner

Michael Gelfand's Select Communications was disqualified after failing to provide a guarantee from an Israeli bank.

Golan Telecom Ltd. has been declared the second winner in the mobile operator tender. The tenders committee today announced that the company will replace Michael Gelfand's Select Communications Ltd., which was disqualified after failing to meet the tender's terms.

Golan Telecom has three main partners, including Michael Golan and Xavier Niel. Golan heads the company and Oren Most handles operations.

The tenders committee had no choice once it became apparent that Select Communications could not provide a guarantee from an Israeli bank, as stipulated in the tender terms. Its disqualification automatically made the next-placed company in the tender the winner.

Golan Telecom is the tender's big winner, because it will have to provide a guarantee of NIS 360 million, compared with NIS 705 million that the tender's other winner, Mirs Communications Ltd., had to provide. The double amount that Mirs paid adds to its interest payments and greatly increases its exposure to its creditor banks. This gives Golan Telecom an edge as a new player without the support of a telecommunications group. (HOT Telecommunication Systems Ltd. (TASE: HOT) in the case of Mirs).

Golan Telecom's win (assuming it can provide the bank guarantee) will help develop Israel's mobile market. According to a "Globes" interview with Niel, the owner of France's Free Telecom SAS, Israel's mobile prices are very high, because carriers make a lot of money and don’t want competition. He said that he would offer the public a simple deal: subscribers will pay a fixed fee for a package of services - a model that has only been partly applied by Israeli carriers who do not want consumers to know what they are really paying.

Published by Globes [online], Israel business news - www.globes-online.com - on July 18, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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