Shareholders in the IBC fiber optic venture are very troubled by the recent developments in the cellular market, due to their ability to impact the odds of the venture’s success.
Sources involved with IBC reported to “Globes” that they are greatly concerned by the fact that Hot Mobile Ltd. intends to build a joint network with Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), and also over the ongoing discussions between Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) unit Pelephone Communications Ltd. about building a similar network. IBC declined to comment on the developments.
Last week, with the announcement of the agreement between Partner and Hot Mobile, concern over the developments was felt at IBC, and when it became clear that Pelephone and Cellcom were in talks to build a similar network, the concern became more tangible.
For IBC, Partner and Cellcom are the two biggest players in the communications market, and they are the two with which IBC most wants to sign deals, as they are potential clients for the fiber optic infrastructures. Should Hot Mobile build a joint network with Partner, and should Pelephone and Cellcom do the same, the odds that either group will use ICB's infrastructure drop dramatically.
The likelihood of Hot Mobile passing on buying infrastructure from its parent company, Hot Telecommunication Systems Ltd., or of Pelephone passing on buying fiber optic networks from Bezeq, are very low, therefore, the likelihood of the fiber optic network succeeding is very small.
Whether or not they admit it, shareholders at IBC are trying to exercise restraint, and are attempting not to worsen matters by speaking out against the Ministry of Communications. However, the fiber optic venture has expressed concern in private discussions, and has warned of great danger.
The Ministry of Communications and the Antitrust Authority will not be able to ignore the interests of the fiber optic venture when it comes time to set the terms of the network mergers. However, if IBC’s interests are not taken into account, the venture will find itself in a difficult situation with a dearth of customers.
A partnership between Partner and Hot Mobile would not be equivalent to the expected partnership between Cellcom and Pelephone. Cellcom and Pelephone are industry leaders in the field of engineering and fiber optics, unlike Partner and Hot Mobile, as Hot’s network is not nearly as developed as Bezeq’s. Cellcom also has very advanced fiber optic networks, so there is no comparison between the infrastructures of the two groups.
Published by Globes [online], Israel business news - www.globes-online.com - on November 18, 2013
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