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Antitrust authority summons Cellcom to a hearing to express its concerns over proposed Golan Telecom merger.
Cellcom’s plan to acquire smaller rival Golan Telecom is facing a serious obstacle in the form of Israel’s competition watchdog, the telco revealed on Monday.
The Israeli antitrust commissioner has informed Cellcom that "it is considering opposing" the proposed Golan Telecom purchase in its current form, the operator explained in a brief statement.
As a result, the Israel Antitrust Authority has summoned Cellcom to a hearing at which it will outline its concerns about the merger and allow the mobile operator to propose solutions, before making a decision in the case.
Cellcom agreed to pay 1.17 billion shekels (€277 million) for 100% of Golan Telecom in November.
At the time it said it intends to maintain Golan Telecom as an independent entity, noting that the acquisition essentially allows it to add a low-cost brand to its portfolio.
Golan Telecom launched services in 2012 as a disruptive, value player. It is owned by French businessman Michael Golan and counts Xavier Neil among its shareholders.
It had around 900,000 subscribers when the deal was announced and a market share of 8.5% by the end of 2015, according to estimated figures in Cellcom’s annual report, making it the smallest of Israel’s main mobile network operators.
Cellcom is the largest player in the market, with 2.84 million customers and a market share of 27% as of end-2015, but its competitors are hot on its heels. The market leader’s figures show that Partner and Pelephone had shares of 26% and 25% respectively at the end of December, while number four operator Hot Mobile claimed 11.6% of the market. The country’s MVNOs together had 1.6%, Cellcom estimates.
While Golan Telecom’s customer base will provide a valuable boost to Cellcom, should the deal go ahead, there is more to the acquisition than scale.
Cellcom has expressed concerns about its spectrum position, with regard specifically to the growing demand for data in Israel, and is keen to add Golan Telecom’s LTE frequencies to its own.
It is unclear at this stage whether the transfer of spectrum is among the Israel Antitrust Authority’s objections to the deal.
Cellcom knows it could face a battle to win over the regulators though.
"We anticipate that obtaining such approvals will be challenging, specifically in light of the strong opposition to the
transaction, led by the Ministry of Treasury," it said in its latest annual report.
