Cellcom: We'll only launch IPTV after infrastructures settled

Minister of Communications Moshe Kahlon today visited mobile carrier Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) to study the company's new television proposal. The company presented its television solution based on a solution by the project integrator Ericsson AB (Nasdaq; OMX: ERIC). The visit indicates that Cellcom has already closed several content contracts with leading studios, including Warner Bros.

During the visit, Cellcom raised several issues, which it considers as conditions for a launch. They include a demand to cancel payments for using Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and HOT Telecommunication Systems Ltd. (TASE: HOT) infrastructures. The demand goes against the Ministry of Communications' position that the parties should reach a deal through negotiations. In other words, even if the price is ultimately reduced, it will not be eliminated.

Cellcom also expressed reservations about the ministry's continued protection for HOT, which gives it an important advantage against all other players in the market, which, for example, cannot offer combined television, Internet, and telephony packages for a single price.

Cellcom said that for it to be able to offer its television service, it must have improved Idan+ (digital terrestrial television) coverage, which is an important part of its proposal for broadcasting public television stations.

Cellcom representatives told Kahlon that if the regulatory problems were solved, the company could put its service on the air immediately. It also wants the Ministry of Communications to act to lower connective charges in the telephony market, and to complete arrangements for the wholesale market, which will enable the company to buy telephony infrastructures services from Bezeq and HOT at reduced prices.

Cellcom CEO Nir Sztern said, "We welcome any initiative that encourages competition in the television market by the Ministry of Communications. Cellcom's entry into the television market will revolutionize it and change everything we know about the sector. We expect regulations in the sector to be sorted out, which will enable Cellcom's entry into it to create real competition."

Cellcom's share price rose 0.5% in early trading on the New York Stock Exchange today to $6.95, giving a market cap of $690 million, after rising 1.5% on the TASE today to NIS 26.90.

Published by Globes [online], Israel business news - www.globes-online.com - on June 14, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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