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Judge rules in market leader’s favour, despite Golan Telecom’s claims it felt ‘exploited’ by takeover deal.
Cellcom on Thursday revealed that a district court judge ruled in its favour and agreed to freeze the proposed network hosting deal between rival mobile operators Golan Telecom and Hot Mobile.
"The district court granted an interim injunction against the consummation of the Golan Telecom/Hot Mobile agreement, as requested by the company," Cellcom said, in a filing with the Tel Aviv Stock Exchange.
The announcement follows an earlier filing from Cellcom in which it announced it had begun legal action against Golan Telecom for breach of the pair’s takeover and network roaming deal.
Cellcom agreed to acquire 100% of Golan Telecom for 1.17 billion shekels (€277 million) in November last year, but it was clear from the start that regulatory approvals would be difficult to obtain, given Cellcom’s status as market leader. The takeover deal also made provision for a roaming agreement between the pair to continue.
Israel’s competition authorities did indeed block the deal, but the operators continued to work together on the network-sharing element of their partnership. However, after rumours of interest from Russian businessman Roman Abramovich, Golan Telecom announced a network deal with Hot Mobile, effectively breaking its agreement with Cellcom. Cellcom immediately demanded ILS900 million in compensation from Golan Telecom.
According to Israeli newspaper Globes, Tel Aviv District Court Justice Dafna Avnieli on Thursday issued a temporary injunction against Golan Telecom, freezing the network hosting deal it signed with Hot Mobile on the grounds that the deal violates its previous agreement with Cellcom.
The judge acknowledged that Golan Telecom "felt exploited and restricted by the draconic terms of its agreement with Cellcom," but ruled that that did not give it the right to violate the deal, the paper reported.
Avnieli also required Cellcom to pay a NIS200,000 bond to cover possible damages, should the court eventually rule in Golan Telecom’s favour, Globes said, while Golan Telecom was charged NIS25,000 in court costs.
