Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) is considering whether it has grounds for objecting to the sale of Golan Telecom Ltd. to Electra Consumer Products (TASE: ELEK). One possible reason is the loan granted by Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) to Electra Consumer, and the other is that from what the parties have announced, it appears that the network unification agreement signed by Electra Consumer and Cellcom is not really a network unification agreement; it looks more like an agreement allowing Electra Consumer to function as a virtual operator, without really owning half of Cellcom's network the way HOT Mobile Ltd. is a partner in Partner's network in the framework of the network unification agreement between them.
Sources inform "Globes" that Partner is considering whether the loan is actually an acquisition agreement designed as a substitute for Cellcom's acquisition of Golan Telecom, which was not allowed. Other than its NIS 130 million loan from the deal, Electra Consumer is paying for the rest of the deal with equity and bank loans.
Without the loan from Cellcom, which is repayable eight years after the deal is signed and approved, Electra Consumer would not have gone ahead with the acquisition. What Partner is investigating is whether the deal will enable Cellcom to acquire Golan Telecom from Electra Consumer several years from now.
The Ministry of Communications opposed the agreement that Cellcom and Golan Telecom submitted to it at the time, asserting that it lacked elements proving that the two companies had signed a real network partnership agreement. As far as the Ministry of Communications is concerned, the agreement between Partner and HOT Mobile is an example of an agreement proving that HOT Mobile really owns half of the network.
Partner intends to verify that Electra Consumer fully complies with the terms that Golan Telecom must meet in the framework of the networks unification agreement. Partner petitioned the High Court of Justice against the Ministry of Communications for not enforcing Golan Telecom's license commitments, which is actually the reason why Golan was able to set extremely low prices and cause a severe upheaval in the market. Where Partner is concerned, if Electra Consumer or any other company is obligated to make major investments for obtaining 50% ownership of the network, it will not be able to sell services at dumping prices, as Golan Telecom did.
Published by Globes [online], Israel Business News - www.globes-online.com - on January 24, 2017
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