The Israel Antitrust Commissioner could change the face of Israel's telecommunications industry this week when she decides the fate of the merger between Golan Telecom and Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL). Yesterday evening, Michael Golan, whose company is supposed to merge with veteran company Cellcom, commented for the first time on the controversial agreement that the state is expected to rule out. On Channel 2 television's "Weekend News" program, he attacked the prime minister and the minister of finance, saying, "I've done more than Netanyahu and Kahlon for the ordinary Israeli citizen. The regulators want to eliminate me for political reasons."
Golan's mobile company now stands at a crossroads, and is involved in a battle that is both economic and political. Unless he obtains far-reaching concessions, his network will collapse and hundreds of thousands of subscribers will be left hanging in the air. If he does obtain such concessions, they are unlikely to withstand legal challenge.
Minister of Finance Moshe Kahlon wants to rescue the reforms in the mobile telephony market that he introduced when he was minister of communications and on which he built the election campaign of his Kulanu party. On the other hand, Prime Minister Benjamin Netanyahu, who is now also minister of communications, does not wish to make concessions to Golan Telecom, mainly because he knows that the High Court of Justice will strike them down.
Six months have passed since Golan signed the agreement to sell Golan Telecom to Cellcom, and now for the first time he has broken his silence. "If Netanyahu decides not to give us concessions, the company will collapse," Golan said. Referring to the leader of Lebanese terrorist organization Hezbollah, Golan said, "That decision is Nasrallah's dream. If we collapse, the entire mobile telephony market will collapse like a set of dominoes, as will competition in the Israeli economy as a whole.
"I gave Israeli citizens NIS 5 billion as a result of the reform and the reduction in prices," Golan claimed, "Netanyahu has to decide whether he wants to see competition and Golan continue, or to eliminate competition and the reform and if we are eliminated, competition in all sectors will be damaged and the Israeli citizen will pay the price." He said he had invested and lost money for the sake of the country's benefit and accused Kahlon and Netanyahu of "throwing the banner of competition to the dogs."
Golan is naturally unhappy with both the possibilities that Netanyahu and Kahlon favor. As far as he is concerned, any decision that does not allow the sale of Golan Telecom to go ahead is problematic, and he wants to sell his network to Cellcom for the astronomical sum of NIS 1.8 billion.
Golan completely rejected the accusations that he only wants to make a killing on the back of Israeli consumers and go home with a substantial profit. "I'm a Zionist," he said, "I left a comfortable life in Paris and came to do good for the Israelis. It pains me to see the regulators destroying the future."
The Ministry of Communications said in response, "Michael Golan's remarks are outrageous. Golan received benefits from the state to the tune of hundreds of millions of shekels in order to set up an advanced cellular network, but he breached the terms of his license. Now Golan wants further benefits amounting to some NIS 1 billion to commit further acts in contravention of the terms of the tender and the license he was awarded. As far as his request to be allowed to merge with Cellcom is concerned, in the face of concern about harm to competition in the market - the Antitrust Commissioner is due to decide on the matter this week."
Published by Globes [online], Israel business news - www.globes-online.com - on April 10, 2016
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