Contradictory predictions are being made about whether Golan Telecom Ltd. will make a request to the Ministry of Communications to become a virtual operator before it is sure that it will obtain authorization from the Antitrust Authority, because without such authorization, there is no point in submitting a request to the Ministry of Communications.
Senior sources involved in the question of Golan Telecom's future believe that the fact that Golan Telecom has only filed a request to the Antitrust Authority for authorization of its cooperation with HOT Mobile Ltd., and not a request to the Ministry of Communications to become a virtual operator, indicates that either Golan Telecom is trying to avoid a clash with the Ministry of Communications in the matter, or believes that the terms of its license do not require authorization from the Ministry of Communications.
These assessments are based on the report to the TASE by HOT Mobile stating that the deal was subject to approval from the Antitrust Authority, and saying that HOT Mobile and Golan Telecom would notify the Ministry of Communications and act according to its instructions. This is also supported by the letter sent to the Antitrust Authority by HOT Mobile and Golan Telecom, reported in "Globes," concerning an exemption from the ban on an agreement in restraint of trade.
The question is what the Ministry of Communications will do if and when Golan Telecom submits a request to exchange its cellular operating license for a virtual operating license. The Ministry of Communications faces a difficult legal problem, because there is no precedent for a cellular license holder returning a license and requesting a new license.
Usually, this happens only when the operator is closing down its business and sending its customers to the other companies, or when it is selling itself. In the case of Golan Telecom, moving its customers from one license to another creates legal difficulties, and it is impossible to predict the Ministry of Communications' attitude towards the switch, because its license does not allow this.
For this reason, and in view of the rumors about the Ministry of Communications objections to Golan Telecom's plan, it cannot be ruled out that the company has indeed not submitted its request, and will claim that it has not altered its business in any way, except for changing its infrastructure provider (from Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) to HOT Mobile), and that its violation is the same as it was when it operated on the Cellcom network.
The Ministry of Communications is due to decide in the coming weeks about how much of Golan Telecom's guarantees it will foreclose, a question that is currently under consideration by the Ministry of Communications' legal department.
Golan Telecom declined to respond to the report.
At the same time, Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), which is conducting legal proceedings against the Ministry of Communications' failure to enforce the terms of Golan Telecom's license, contacted the Ministry of Communications and the Attorney General, and demanded that they refrain from approving Golan Telecom's agreement with HOT Mobile, which it says should be struck down. In its petition, Partner said that the agreement contradicted the state's presentation to the Supreme Court, and that Golan Telecom's conversion into a virtual operator was illegal, because it contravened the license granted to Golan Telecom by the state.
According to Partner, the Ministry of Communications itself ruled in a professional opinion that making Golan Telecom a virtual operator was directly opposed to the public interest. "The request is scandalous," Partner wrote in its letter to the Ministries of Justice and Communications.
The letter also asserts that converting Golan Telecom to a virtual operator's license would be a retroactive change in the terms of the agreement following the tender, and should therefore not be allowed.
A letter to Deputy Attorney General Avi Licht and Ministry of Communications legal advisor Adv. Dana Noyfeld, which include the legal grounds for rejecting the agreement, stated, "The Ministry of Communications' approval of the hosting agreement will in effect constitute acceptance and approval of Golan Telecom's violations, while damaging the other operators who are fulfilling the obligations under their licenses, and the entire public, and delivering a harsh message that violations do pay."
Published by Globes [online], Israel business news - www.globes-online.com - on July 5, 2016
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