Israel's Cellcom enters sharing agreement with rivals for creation of 4G network
Israel's biggest mobile phone operator Cellcom said it would be working together with its two competitors in sharing the expenses for the establishment of a new fourth generation or 4G network, according to a Reuters report. Cellcom plans to build and operate a shared 4G radio network with Pelephone and Golan Telecom. It will still have to get the approval of antitrust regulators, the report said.
Pelephone is the third largest mobile operator in Israel while Golan is a newcomer to the market, starting operations only last year after the sector was opened to competition by the Communications Ministry to reduce mobile phone rates. Pelephone is a unit of Bezeq Israel Telecom while Iliad Founder Xavier Niel partly owns Golan. With six new operators entering the mobile segment, incumbent operators experienced a drop in their call rates, share prices and revenues, the report said.
Cellcom Chief Executive Officer Nir Sztern said continued challenges are still in store for the cellular market in Israel in the years to come as companies strive to meet the demand growth stemming from mobile data. He told Reuters, "The network sharing agreements will help reduce the number of cell sites and the reduced cost will help maintain competition to the benefit of the Israeli consumer." Sztern added that the sharing agreements would most likely lead to substantial savings in operating and capital expenses.
The deal states that the three operators will work together to get frequencies for the 4G network. It will then be constructed and then operated by a newly-created company that will be owned equally by Cellcom and Pelephone. The agreement also stipulates that each of the operators will need to buy and operate its own core network with the costs divided equally among the three operators. This will be subject to the conditions and limitations that will be set in the 15-year agreement, the report said.