Xphone owner businessman Hezi Bezalel and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) have requested permission from the Antitrust Authority to begin negotiations on a network merger agreement. The request is merely a formality; the parties are far from completing an agreement, but they nevertheless submitted the request to make sure that there was nothing to prevent them from negotiating.
Bezalel purchased frequencies for establishing a cellular network in the framework of the frequencies tender conducted in early 2015. According to Ministry of Communications policy, he is entitled to combine forces with one of the existing operators, and to use its network, in exchange for a commitment to invest in and maintain the network. He must be part owner of the network, not merely hosted on it. Bezalel has not yet signed such an agreement.
The Ministry of Communications is finding it difficult to understand what Bezalel's intentions are, and whether he really plans to enter the cellular sector. He is constantly striving to give the impression that he bought the frequencies in order to enter the market, not in order to trade them, and will do so as soon as he obtains proper terms from one of the operators. Meanwhile, months of negotiations with Partner and Pelephone Communications Ltd. have failed to produce any agreement.
The Ministry of Communications does not know how to deal with the fact that Bezalel received the frequencies, but did not submit a request for a cellular license. Since there is no precedent, the Ministry of Communications is trying to help Bezalel achieve network merger agreements, but the question remains of what happens to a party that buys frequencies and holds them for 18 months without requesting or receiving an operator's license.
The Ministry of Communications does not want to take the frequencies away from Bezalel, and it is unclear whether it has the power to do so, while on the other hand, Bezalel is showing no signs of being close to signing an agreement or planning to use the frequences he bought. The result is a stalemate.
Published by Globes [online], Israel business news - www.globes-online.com - on June 29, 2016
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