Mobile operator Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) announced today that it is acquiring rival mobile carrier Golan Telecom Ltd. for NIS 1.17 billion. The deal is subject to the approval of the Israel Antitrust Authority and Ministry of Communications and it is by no means certain that the acquisition will be approved.
Golan Telecom has a debt of nearly NIS 500 million to Cellcom due to the difference between the price Golan pays for use of its network and the price it was due to pay as part of its network sharing agreement. Cellcom is waiving this debt and it is also possible it will be required to pay the Ministry of Communications NIS 270 million in guarantees because Golan Telecom has not fulfilled the conditions of its license.
Golan Telecom launched operations in 2012 with a strong brand recognized for low-cost services, and provides cellular services to 900,000 subscribers. Golan is expected to end 2015 with total revenue exceeding NIS 500 million
Cellcom chairman Ami Erel said, "In the last few years, Cellcom Group has repeatedly proven its ability to increase its service offerings, going from a cellular only operator to a full service communications group, with cellular, fixed line, internet and TV offerings, and succeeding despite the fierce competition."
He added, "The acquisition of Golan Telecom will allow us to add a low-cost brand to our portfolio, and I'm confident that Cellcom's management will be able to successfully combine Golan's operations as the Company's low cost brand. I thank the Company's controlling shareholders for their unrelented support and assistance in enhancing value for the Cellcom Group."
Cellcom CEO Nir Sztern said, "The acquisition of Golan Telecom is another important step in making Cellcom Israel a leading telecommunications group that brings high value at attractive prices to Israeli consumers. In the last year, we revolutionized the fixed line market by introducing a new TV service alongside highly attractive prices in triple play/packages and fixed line wholesale services. We intend to maintain Golan Telecom as an independent company and can assure all Golan Telecom's customers that we will honor all of their present agreements. We look forward to welcoming all of Golan's employees to the Cellcom Group family."
Published by Globes [online], Israel business news - www.globes-online.com - on November 5, 2015
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