Leading cableco HOT has initiated merger talks with number four mobile operator MIRS, it informed the Tel Aviv Stock Exchange.
HOT also said that its board had approved the tie-up, which would benefit from synergies. It has reportedly mandated…
Leading cableco HOT has initiated merger talks with number four mobile operator MIRS, it informed the Tel Aviv Stock Exchange.
HOT also said that its board had approved the tie-up, which would benefit from synergies. It has reportedly mandated consultants to carry out valuations and advise on deal structure, but declined to name them.
Local media speculated that the transaction could take the form of a cash buy or a share swap, valuing MIRS at NIS1- 1.2bn (US$290-347m).
Both companies are controlled by French businessman Patrick Drahi, and neither was available for comment by press time.
Cool Holdings, the holding company controlled by Drahi that owns Hot Cable Systems, last year made a US$170m offer to buy a reported 95% stake in MIRS, which was owned by Motorola. Merrill Lynch advised the seller.
Stella Handler, who last month left the helm of ISP 012 Smile after its recent sale to Partner, will lead the merger and integration effort as the chairwoman of HOT. Once the deal is done, Drahi will be on course to go head to head on quadruple play with the incumbent, Bezeq.
Drahi currently owns 52% of HOT, and has an agreement in place with shareholders Eliezer Fishman and Arnon Mozes to raise this to 65%.
The proposed tie-up comes in the wake of mobile operator Partner agreeing to absorb international landline operator (ILD) and ISP 012 Smile, and rival cellco Cellcom looking to buy 100% of ILD and ISP Netvision from the holding company that owns them both, IDB.
All stem from the Ministry of Communication (MoC)’s recent approval of changes enabling mobile operators to hold an ILD licence if they agree to a structural separation between their long distance and cellular operations – meaning separate managements and separate IT systems. Previously, these kinds of companies have been owned as separate entities, but often under the umbrella of a single holding group.
The MoC has said it will no longer require structural separation by the close of 2012, or until a sufficient number of MVNOs are in place, whichever happens sooner.
What this will mean for consumers, who until now have had to pay separately for different telecoms services offered by the same telecoms provider, is the opportunity to buy triple or quadruple play products.
“The regulator now feels that it is better to have five big groups providing all services than many companies competing to offer many services”, Hapoalim analyst David Levinson told TelecomFinance last month.
MIRS and HOT were not available by press time.
