Golan Telecom Ltd. announced Wednesday that it was considering whether to offer the mobile carrier for sale or acquire one of its competitors.
The announcement comes after Golan had amassed 850,000 subscribers and before it enters the TV market, but it is likely a signal that the firm has one intention to sell, not purchase.
Shares of Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) reacted positively to the news, as the mobile sector loses one of its formidable players, Golan, who was responsible for the fierce competition in the market over the past few years.
On the other end of the spectrum, the Israeli consumer will likely be the loser in the scenario, with a likely increase in service costs after the sale of Golan.
Golan Telecom's decision implies that there was no room for growth under the current conditions of the local cellular market and that consolidation is necessary for the sector.
The current climate hurts the veteran mobile providers, and the new firms seem to attract new subscribers at an increasingly slower pace. Therefore Golan has two choices to expand by buying out a competitor or to sell itself for a large sum of money, exiting the market.
Golan's announcement today follows up on the "Globes" report from last month, which revealed that the cellular carrier asked the Rothschild Bank to inquire whether the other providers were interested in either selling their operation or buying out Golan.
Published by Globes [online], Israel business news - www.globes-online.com - on August 26, 2015
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