The Israel Antitrust Authority said it was giving the go-ahead to a merger between competing cellphone operators Cellcom Israel Ltd. and Golan Telecom, signaling a turnaround in the nation’s policies of adding competition to the market and paving the way for further possible consolidation in the cutthroat sector.
The approval comes after the Finance Ministry on Monday said it did not see a reason to oppose the proposed acquisition of Golan by Cellcom, the nation’s largest mobile operator.
Cellcom in February offered to pay NIS 590 million ($172 million) for its smaller competitor Golan, which started operations in Israel in 2012. The cellular industry was opened up that year to competition, which sparked a price war and led to operators struggling to remain profitable.
“The cellular market is one of the most competitive in Israel,” the authority said in a statement on Wednesday, announcing its decision.
Today there are six players in the market, operating on three cellular networks, as well as five virtual operators, all of which offer data and phone packages to a variety of customers.
Golan has been sharing a network with Cellcom since 2017, and thus the merger does not affect the number of networks operating in Israel, the authority wrote. “The market will remain competitive even after the merger.”
In 2016, the authority blocked a bid by Cellcom to buy Golan on concerns a merger would lead to a rise in prices for consumers.
The average revenue per user for the operators has declined to NIS 34.8 as of January 2020, from NIS 47.3 in 2016, the authority said, and the high volume of customers switching from one operator to another, some 2 million subscribers a year, indicates that “competition is strong” — paving the way for allowing the merger, the authority wrote.
The approval of the merger now, despite the fact that the authority had blocked it in 2016, is the result of favorable changes in the market and the crystallization of competitive behavior patterns, said antitrust commissioner Michal Halperin in the statement.