November 1, 2015 / 12:56 PM / 4 years ago

UPDATE 1-Israel's Pelephone offers to buy rival Golan Telecom

(Adds comment from HOT Telecom, share reaction)

By Steven Scheer

JERUSALEM, Nov 1 (Reuters) - Pelephone, Israel’s third-largest mobile phone operator, has submitted an offer to buy smaller rival Golan Telecom that could be the start of a consolidation trend in the country’s mobile sector.

Pelephone’s parent company, Bezeq Israel Telecom, announced the offer on Sunday in a statement to the Tel Aviv Stock Exchange but gave no financial or other details.

In August, mobile market leader Cellcom said it was reviewing a possible purchase of newcomer Golan after Golan had said it was exploring options, including a possible sale of the company.

Israeli financial newspaper TheMarker also reported that HOT Telecom was in talks to buy Golan, which is owned by French businessman Michael Golan and his partner Xavier Niel. Israeli media said Golan’s asking price is 1 billion shekels ($259 million).

HOT is a subsidiary of European telecoms group Altice , controlled by Frenchman Patrick Drahi.

Golan was not immediately available for comment.

“Altice and HOT are not negotiating to acquire Golan Telecom. The company is focusing on further growing its existing business in Israel,” said a spokesman for HOT.

Israel’s mobile phone industry was shaken up in 2012 with the entry of six new operators, including Golan and HOT, sparking a price war that hit subscriber numbers, revenue and profit at incumbents Cellcom, Pelephone and Partner Communications.

Two virtual operators have already merged,

In the past three years, HOT has gained about 1.2 million subscribers and Golan 900,000. Pelephone has about 2.5 million subscribers.

Cellcom and Golan are negotiating with the Communications Ministry over a 3G and 4G network-sharing agreement.

Cellcom is deploying 4G services and Golan would need to buy half that network - at a cost of around 350 million shekels - to meet regulatory requirements.

Bezeq’s shares rose 2.2 percent, Cellcom’s shares gained 3 percent and Partner was up 2.5 percent in a flat Tel Aviv market. ($1 = 3.8605 shekels) (Reporting by Steven Scheer; editing by Adrian Croft)

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