December 10, 2013 / 9:05 AM / 4 years ago

Cellcom, Pelephone to share Israeli 4G network costs

JERUSALEM, Dec 10 (Reuters) - Cellcom, Israel’s largest mobile phone operator, said it agreed to share the expense of setting up a new fourth-generation (4G) network with two rivals.

Pending regulatory and anti-trust approval, Cellcom will construct and operate a shared 4G radio network with Pelephone and Golan Telecom.

Pelephone, a unit of Bezeq Israel Telecom, is Israel’s third-largest mobile operator. Golan, partly owned by Xavier Niel - who founded France’s Iliad and its Free Mobile service - began operations last year when the Communications Ministry opened the sector to competition to lower mobile phone rates.

The addition of six new providers shook up the mobile segment, sending calling rates, share prices, revenue and profit of the incumbent carriers tumbling.

Nir Sztern, Cellcom’s chief executive, said on Tuesday Israel’s cellular market will face continued challenges in the coming years to meet the demand growth from mobile data.

“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,” he said.

Cellcom said the sharing agreements would likely result in substantial operating and capital expense savings.

Under the deal, the three operators will cooperate in obtaining frequencies for the 4G network, which will be built and operated by a newly created entity equally owned by Cellcom and Pelephone.

Each operator will be required to purchase and operate its own core network and costs will be divided equally among the three operators, subject to certain conditions and limitations set in the agreement, which is for 15 years.

Last month, Partner Communications, Israel’s second-largest mobile operator, entered into a similar network sharing deal with HOT Mobile, which is controlled by French cable entrepreneur Patrick Drahi.

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