Cellcom, the country’s leading mobile operator, announced
that ISP/fixed-line operator Netvision had agreed to merger
talks following its NIS1.5bn (US$425.4m) takeover approach
on 13 March.
On the receiving end of the offer was conglomerate IDB
Holding,…
Cellcom, the country’s leading mobile operator, announced
that ISP/fixed-line operator Netvision had agreed to merger
talks following its NIS1.5bn (US$425.4m) takeover approach
on 13 March.
On the receiving end of the offer was conglomerate IDB
Holding, which owns both Cellcom and Netvision, an
international landline operator (ILD) that also provides domestic
landline and internet services.
If successful, a transaction would see Cellcom acquire all of
Netvision’s outstanding share capital for a cash consideration,
based on its share capital’s estimated value of NIS 1.5bn,
whereby Netvision would become a wholly owned subsidiary.
Cellcom said that its proposal was subject to negotiating and
finalizing terms of definitive agreements, further due diligence,
independent valuation and receipt of fairness opinions, as well
as the approval of both companies’ audit committees and
boards of directors.
As of 31 December, Cellcom boasted 3.394 million
subscribers, or 34% market share. On its website, IDB says
that Cellcom accounts for 18% of its revenue, while Netvision
just 3%.
Netvision 013, the company’s full name, is the result of the
2007 merger of NetVision with 013 Barak and GlobCall. 013
NetVision is controlled by IDB through Discount Investments
(33%), Clal Industries (26%) and Elron (16%), while the public
holds approximately 25% of the shares.
Cellcom issues debentures
Subsequently, Cellcom raised NIS1.041bn (US$301m) in
series D and series E debentures under its shelf prospectus.
The issue, which had received commitments worth NIS1.8bn,
was available to Israeli investors only.
NIS 294,347,000 principal amount of Series D debentures
at the price of NIS 1,300.5 per unit (worth NIS1,000 principal
amount), representing an effective interest rate of 2.23% per
annum, linked to the Israeli CPI; the interest rate of this series is
fixed at 5.19% per annum, linked to the Israeli CPI;
NIS 632,295,000 principal amount of Series E debentures at
the price of NIS 1,040.5 per unit (worth NIS 1,000 principal
amount), representing an effective
interest rate of 5.47% per annum; the interest rate of this series
is fixed at 6.25% per annum, with no linkage.
Proceeds of the offering, which closed on 1 April, will be
used for general corporate purposes such as financing the
company’s operating and investment activity, refinancing
outstanding debt under its debentures, partial financing of the
proposed merger transaction with Netvision, if executed, and
continued dividend distribution. Alon gets new Partner
Partner Communications is to host a new MVNO, Alon
Cellular.
The business is owned by local conglomerate Alon Holdings
Blue Square Israel, which owns supermarket and petrol station
chains. It will reportedly be supported by Virgin Mobile, but it
has yet to be decided which brand will be used.
Ellomay Capital, a local investment firm, is reportedly a
partner in the mobile venture.
Partner Communications and Alon Holdings could not be
reached for comment by press time.
Mobile tender this month
The MoC is to tender offer two new bands of spectrum
before Passover, which starts on April 16. Bids were set at a
minimum of NIS10m (US$2.71 million).
The bidders are the fourth operator MIRS; the founder and
former head of French ISP Free’s parent company, Iliad, Xavier
Niel and Mickael Boukobza; Marathon Telecom, which controls
018 XPhone, the fourth largest ISP with less than 5% of the
market; and Select Communications, which is backed by
Americans Michael Gelfand and Louis Mayberg, and Israeli
Shuki Gleitman.
The assumption is that the winners will be one new entrant and MIRS, which with only 4% of the market, must gain new
spectrum if it is to remain in existence. Assuming it does win,
it will then need to raise money to invest in infrastructure, says
Hapoalim analyst David Levinson.
The existing mobile operators are Cellcom (34% market
share), Pelephone (32%), Partner (28%) and MIRS (6%).
As part of its drive to boost competition, the MoC has also
been offering MVNO licences.
Asked whether there is a sufficient market for so many
operators in a country of just 9.84 million where mobile
penetration is already 125%, Itai Brezis, Cellcom’s Director of
Strategy, Business Development and IR, said telcos would still
be able to compete: “TV is definitely one of the places where
companies can differentiate and get ahead, and there will be
a lot of changes to pricing schemes”.
Levinson agreed: “There is enough room for 4-5 operators.
It is a big enough, and profitable enough, market, and
technology moves fast.”The assumption is that the winners
will be one new entrant and MIRS, which with only 4% of the
market, must gain new spectrum if it is to remain in existence.
Assuming it does win, it will then need to raise money to
invest in infrastructure, says Levinson. Asked whether there is
a sufficient market for so many operators in a country of just
seven million, he responds, “There is enough room for 4-5
operators. It is a big enough, for 4-5 operators.
It is a big enough, and profitable enough, market, and
technology moves fast.”The assumption is that the winners
will be one new entrant and MIRS, which with only 4% of the
market, must gain new spectrum if it is to remain in existence.
Assuming it does win, it will then need to raise money to
invest in infrastructure, says Levinson. Asked whether there is
a sufficient market for so many operators in a country of just
seven million, he responds, “There is enough room for 4-5
operators. It is a big enough, and profitable enough, market,
and technology moves fast.”
