Israel regulators oppose Cellcom’s deal to buy Golan Telecom

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Israel’s antitrust watchdog and the Communications Ministry have opposed Cellcom’s plan to buy smaller rival Golan Telecom, Israel’s largest mobile phone provider said on Tuesday.

Cellcom said it had not yet been given reasons for the decision, but would consider its options when it gets them.

Cellcom agreed to buy Golan for 1.17 billion shekels ($305 million) last November but the deal has faced political opposition and regulatory hurdles.

One of five mobile network operators in Israel, Golan launched in 2012 when the government issued new licenses to boost competition in a sector that had been dominated until then by three players.

Golan offered rock-bottom prices that its competitors have struggled to meet and has taken about 10 percent of Israel’s mobile market.

Golan, owned by French businessmen Michael Golan and Xavier Niel, has said rejecting the deal would have a negative impact on the market and cause prices to rise.

But Finance Minister Moshe Kahlon, who was responsible for opening up the cellular market as communications minister, fears that losing one player would lead to higher prices.

Consumers give Golan much credit for offering packages that include unlimited international and local calling, text messages and 6 GB of Internet surfing starting at $8 a month. Such prices have dented the profitability of Cellcom and its rivals.

As part of its license, Golan is required to enter into a network-sharing agreement with Cellcom or build its own.

Earlier this year, Niel said Golan had no choice but to merge with another player since a plan to share Cellcom’s network was not approved by regulators while municipalities in Israel refused to approve the installation of more antennas.

(Reporting by Tova Cohen; editing by Susan Thomas)