The Antitrust Authority will approve by April 7 the 4G network sharing agreement between Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) and Hot Mobile Ltd., which strict limitations. The carriers are waiting for the Ministry of Communications to approve the deal.
It is not clear if the restrictions will be the agreement's time frame or if they will depend on the future situation of frequencies. The Antitrust Authority apparently does not know whether the carriers will face a shortage of frequencies, which would necessitate network sharing, otherwise technology would be affected. If there is no shortage of frequencies, there may be no need to allow network sharing that is not restricted in time. The Antitrust Authority wants to keep its options open because the future is uncertain, and therefore the agreement will be limited in time no matter what happens.
Partner and Hot Mobile agreed to share both their 4G and 3G networks, raising the question whether it is possible to consolidate both networks. Hot Mobile is combining its 3G antennas with Partner. The problem is that Hot Mobile cannot complete its 3G network, because the government barely allows the construction of new antennas. Currently, there are almost 1,000 antennas, many of which will be dismantled under network sharing, but the carrier still needs 1,000 antennas to cover the country, under its commitment to the government. Hot Mobile says that the 3G and 4G network sharing covers this commitment.
If the Antitrust Authority bans 3G network sharing, this will jeopardize the entire agreement, because Hot Mobile cannot solve its problem: its inability to meet its obligation to set up a nationwide 3G network. Hot Mobile will rely on Partner's 4G network that it is already deploying.
After the Antitrust Authority announces its decision on the Partner-Hot Telecom network sharing agreement, it will announce its decision on the agreement between Pelephone Communications Ltd., Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), and Golan Telecom Ltd. Sources do not think there is a chance that the Antitrust Authority will approve it, even under tight restrictions. It sees no important reason to allow Pelephone and Cellcom to collaborate, which means that Golan Telecom will have to share with one of them. Any such agreement would face strict restrictions and sanctions for violating them.
The Ministry of Communications is due to publish its policy statement on network sharing soon. It wants three networks, which will be used by the five carriers, and has dismissed Pelephone and Cellcom's argument that the shortage of frequencies creates a market imbalance between the carriers if Partner and Hot Mobile are allowed to share networks while they cannot.
Partner said, "The process with the Antitrust Authority is ongoing and no decision has been made yet. Partner will not disclose any information on the matter."
Published by Globes [online], Israel business news - www.globes-online.com - on March 27, 2014
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