Israeli multi-service operator Cellcom has entered into a memorandum of understanding (MOU) with the shareholders and main creditors of Israel Broadband Company (IBC) to buy a majority stake in the wholesale fibre provider.
Under the MOU with the shareholder/creditor group – led by Israeli Electric Company (IEC) – Cellcom is offering ILS100 million (USD27.2 million) for 70% ownership of IBC, with the remaining 30% of issued and outstanding share capital to be owned by IEC. The transaction would also be subject to an updated agreement between IBC with IEC and an indefeasible right of use (IRU) broadband service agreement between Cellcom and IBC within a certain period from the MOU execution. Further, the MOU contains certain precedent conditions to the closing of the transaction, including regulatory approvals (including with regards to the change of IBC’s deployment obligations) and tax arrangements.
Cellcom CEO Nir Sztern was cited as saying: ‘Cellcom Israel’s investment in IBC will allow its continued operation and the ability to initially offer fibre-optic internet services to approximately 150,000 households in IBC’s current deployment areas. Our objective for Cellcom Israel and IBC’s fibre-optic deployment is reaching over 500,000 households in three years, reaching approximately 900,000 and 1,200,000 households after five and ten years, respectively.’