Announcement of the merger between Golan Telecom Ltd. and Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) is proving to be inauspicious for the former's recruitment of subscribers, judging by the subscriber churn data from the beginning of the week. On the other hand, Golan Telecom was already recruiting far fewer subscribers in the past two months.
The market attributes these results to the effect of Michael Golan's announcement three months ago of his intention to sell the company. The merger deal was announced last Thursday, a day on which Golan Telecom recruited a net of only 163 subscribers. Friday was even weaker, with only 75 subscribers being recruited.
It is interesting to see the trend this week. It appears that Golan Telecom has begun losing subscribers. The company recruited a miniscule 113 subscribers on Sunday, compared with a gain of 1,143 subscribers a week previously, then lost subscribers on Monday and Tuesday.
Sundays are usually the strongest days for recruiting subscribers, so the difference between the two Sundays stands out. One of the major risks that Golan Telecom is taking in the merger deal is waiting a year for regulatory approval. Judging by the negative response and the widespread criticism, it appears that Golan Telecom's positioning as a generator of competition is being replaced by the labeling of Michael Golan as someone who set up business to make a quick profit and leave. It will therefore be interesting to see how this is reflected in the company's volume of subscriber churn.
Published by Globes [online], Israel business news - www.globes-online.com - on November 11, 2015
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