Bezeq's Pelephone inks another mobile operator deal

JERUSALEM Tue Feb 15, 2011 12:53pm EST

JERUSALEM Feb 15 (Reuters) - Israeli mobile phone operator Pelephone said on Tuesday it had signed a deal allowing retailer Rami Levi (RMLI.TA) to use its infrastructure to provide cellular services.

Pelephone, the mobile phone unit of Bezeq Israel Telecom (BEZQ.TA), is the first of Israel's four mobile phone operators to agree to allow a mobile virtual network operator (MVNO) to use its network.

Under the deal, Rami Levi will sell mobile phones and cellular services at its supermarkets via Pelephone's network, starting in the third quarter. No other details were disclosed.

Israel's Communications Ministry has taken a series of steps to boost competition and help lower rates for consumers, including the licensing of several MVNOs to use the infrastructure of existing operators to provide services. [ID:nLDE68K201]

Bezeq is Israel's largest telecoms group while Pelephone is the country's third-largest mobile operator.

Pelephone said the only way to grow is through MNVO deals, especially since it has a new high-speed network with a large amount of capacity.

"Pelephone's business strategy in the context of MVNOs is 'co-opetition', which is a combination of competition with cooperation in infrastructure, with the understanding that's where the world is going," said Pelephone chief executive Gil Sharon in a statement.

"The MVNO is another way for us to increase profits in a changing marketplace, while maximising the capabilities of Pelephone's advanced network," he said.

Rami Levi will be the second MVNO to sign a deal with Pelephone. In December, Pelephone agreed to allow an MVNO called Free Telecom to use its network. [ID:nLDE6BM0CW]

But the first MVNO to receive a licence -- Telecom 365, a unit of retail group Hamashbir MSBZ.TA -- gave its licence back to the government, instead signing a deal with Pelephone to jointly market mobile phone services at some 140 retail locations owned by Hamashbir. [ID:nLDE6BR0V4]

Israel has four mobile phone operators, the largest being Cellcom (CEL.TA) (CEL.N), followed by Partner Communications (PTNR.O) (PTNR.TA), Pelephone and Mirs. The mobile phone penetration rate in Israel is estimated at about 125 percent, one of the highest in the world. (Reporting by Steven Scheer; Editing by Jon Loades-Carter)

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