The share prices of Israel's mobile operators could jump by as much as 30% following the acquisition of Golan Telecom Ltd. by Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), says Halman-Aldubi this morning. The deal could raise prices in Israel's cellular market, the Israeli analyst adds.
Halman-Aldubi said, "Cellcom was the logical choice due to the operational ease of transferring Golan Telecom's activities to it (because Golan already uses Cellcom's network) and the major debt that Cellcom has to it. Although Cellcom is expected to profit from this step, providing it succeeds in keeping Golan's subscribers (no simple task due to the profile of these customers), the real profit will be divided up by all the companies still in the market. Golan was the main company creating competition in recent years and its disappearance from the map is expected to reduce the competitive pressure in the sector."
Halman-Aldubi sees the mobile operators gaining at the customers' expense. The analyst believes that average income per user (ARPU) that was due to rise according to estimates from the end of 2016 will now begin creeping upwards for the foreseeable future. Estimates are that it will rise NIS 10 per month ARPU and in the long term will lead to a rise of 30% in the company's market cap.
However, Halman-Aldubi stresses that, "The certainty that the deal will be completed is not high at this stage. As published in the past, the Israel Antitrust commissioner will oppose the sale of Golan Telecom to one of the three big players and without the imminent collapse of Golan, I see no reason for him to change his mind."
Published by Globes [online], Israel business news - www.globes-online.com - on November 5, 2015
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