Pelephone, the 50/50 wireless joint venture owned by fixed line incumbent Bezeq and Pelephone Holdings, a Delaware-based corporation owned by Ron Disney’s Shamrock Holdings, has announced the launch of 3G services over an 1xEV-DO network. The new network will initially only be available in central Israel – an area which includes the capital Tel Aviv – but will be rolled out to all urban areas by February 2005. According to Pelephone CEO Yacov Gelbard, the company expects 3G content revenues to generate ILS20 million (USD4.4 million) in 2005, rising to ILS200 million within three years. By 2008 revenues from data services and 3G content are expected to account for 12% to 15% of Pelephone’s annual revenue.
Originally an analogue network operator, in December 1997 Pelephone awarded Motorola a USD169 million contract for the installation of a CDMA network, which was duly launched on a national basis in January 1999. A further USD122 million contract between the two parties was agreed a year later, covering the expansion of capacity, additional coverage of rural areas and improved voice quality. In a bid to steal a march on rivals Cellcom and Partner, as well as to attract new customers in an increasingly saturated market, in 2002 Pelephone began rolling out a 1xRTT upgrade, completing the first phase of deployment, which included coverage of urban areas between Ashdod, northern Haifa and Jerusalem, in June 2003. The original USD147 million 1xRTT network was supplied by Nortel, although a second phase was undertaken by Motorola at a cost of USD90 million. In May 2004 Pelephone took the next great leap forward with the award of a two-year supply agreement to Nortel for the provision of CDMA2000 1xEV-DO equipment.
Pelephone’s 3G offering will compete head-to-head with Cellcom’s W-CDMA network which was launched last month. Finland’s Nokia was selected to win the contract for the delivery and installation of the new network, which now covers Sharon, a coastal region north of Tel- Aviv, and is believed to have in the region of 1,000 customers.