Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) unit Pelephone Communications Ltd. and Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) have begun weighing the odds of their being allowed to collaborate on building a 4G cellular network, following the agreement between Hot Mobile Ltd. and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR). These are very initial discussions in response to the dramatic change in the market.

Sources in the communications market believe that the two companies would be happy to collaborate in the event that the Antitrust Authority grants approval. However, such a deal would be more difficult and complicated than the deal between Hot Mobile and Partner was.

Collaboration between Pelephone and Cellcom would be different in its nature from the collaboration between Hot Mobile and Partner, since Hot Mobile is a small new player in the market, which is having difficulty building a network with nationwide coverage. This is not the case with Pelephone and Cellcom, therefore, such a merger could present a much more thorny problem.

The preference of the Ministry of Communication is that the next consolidation include Golan Telecom Ltd., therefore, it stands to reason that if such a process were approved, Golan Telecom would have to be a part of it. These speculations were made before Partner and Hot Mobile had announced their agreement. Odds are that Golan Telecom will be link up with one of the veteran companies, Pelephone or Cellcom, and will not necessarily create a merged network between the two big companies.

Published by Globes [online], Israel business news - www.globes-online.com - on November 13, 2013

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