Israeli authorities likely to oppose merger of Golan Telecom with one of its rivals

27 Oct 2015

Israeli government officials will reportedly oppose a merger between mobile network operator Golan Telecom and a competitor over fears such a move could impact competition in the sector. According to Haaretz, government officials from both the finance and communication ministries considered the prospect of such a development earlier this week (25 October) after Golan retained investment banks to explore a sale of the company. Speaking on the matter, a senior government staffer was quoted as saying: ‘A Golan merger is not good for the market. The most realistic scenario would be [a merger] with Cellcom, the biggest company in the market, and together they would have a market share of 40%.’ While Golan has reportedly been advised of the likely rejection of any merger it may seek to pursue, until any concrete deal is reached the deliberations by the government officials remain theoretical, however.

Notably, however, Shlomo Filber, director general of Israel’s Ministry of Communications (MoC), actually voiced support for consolidation in a separate interview with Bloomberg published yesterday. While the executive was said to have supported the stance of the government officials in the meeting on Monday, in the discussion with Bloomberg he was actually cited as saying: ‘I don’t see a problem with Cellcom, Partner or Bezeq buying Golan if they want … The market will continue to be competitive even with four main players and other niche players, with rational prices that will enable reasonable profitability and infrastructure investment.’ Backing up such a view, Mr Filber claimed that the market had ‘lost its correct balance regarding price’, specifically pointing to the fact that local cellcos were ‘selling a monthly line for around ILS35 (USD9)’; while he compared such prices to an Organisation for Economic Co-operation and Development (OECD) average of around ILS86 per month it should be noted that the ILS35 per month price mentioned by the executive is believed to relate to introductory rates offered by Israeli cellcos.

Israel, Golan Telecom, Ministry of Communications