Cellcom, Israel’s leading operator, is taking legal action against Golan Telecom after the latter abandoned a deal they were working on and chose Hot Mobile instead.
A month ago, Cellcom said it wanted smaller rival Golan to pay ILS900 million ($233 million) in compensation for dropping the deal and working with Hot, a cable TV provider and the country’s number four mobile operator.
Now it has threatened legal action, “including a request for an interim injunction against the consummation of the Golan Telecom – Hot Mobile agreement.”
Cellcom said the hosting agreement with Hot Mobile “constitutes material breaches of the share purchase agreement (SPA) and national roaming agreement (NRA) between the company and Golan Telecom”.
Cellcom wanted to acquire Golan last year but prime minister Benjamin Netanyahu, as well as regulators, opposed the move, saying the deal was contrary to efforts to introduce more competition.
Following that, Cellcom was working on an agreement that would allow Golan to continue to use its network. But last month Hot, owned by French cable group Altice, said it was negotiating its own ten-year deal with Golan.
When Cellcom agreed to purchase Golan for ILS1.17 billion, it was also decided that if the acquisition did not go through, Golan would have to pay a ILS150 million termination fee to Cellcom plus ILS450 million for use of the latter’s network.
This, coupled with ILS300 million of discounts Cellcom provided Golan under the NRA, brings the total to ILS900 million.
“Should Golan fail to remedy all such breaches within the time frame set in the agreement, the company will take all actions available to it under the SPA, NRA and applicable law, against them,” Cellcom had said a month ago.
“A substantial reduction of the future revenues from Golan Telecom will have a material adverse effect on the company’s revenues and results of operations,” it had added.
According to GSMA Intelligence, Cellcom is the country’s top operator, with around 27 per cent market share, while Golan comes in last place, behind Orange (Partner), Pelephone (Bezeq) and Hot Mobile