Israel eyes 5G mobile network auction by mid-2019

AIRPORT CITY, Israel, Dec 27 (Reuters) - Israel’s telecoms regulator unveiled plans on Thursday to publish a tender for fifth generation (5G) mobile networks in the first half of 2019, at a time when fierce competition has slashed profitability at local operators.

The Communications Ministry expects the tender in April or May, with the hope frequencies can be allocated by the end of 2019 and 5G can be launched between 2020 and 2023, the ministry’s director-general, Netanel Cohen, said.

“If you want to be a strong economy in social technologies, everything will be by the internet and everything depends on 5G,” Cohen told Reuters following a news conference.

5G - which is at least 10 times faster than 4G - is necessary to develop health, agriculture and education, as well as “smart” cities and self-driving cars, Cohen said, adding fast communications were a must for the military.

He estimated a 5G network - which would be an additional layer on existing 4G networks - would cost around 2 billion shekels ($529 million).

The cost, though, may be too steep for operators, which are struggling to remain profitable in a country with 8.9 million people and nine mobile providers.

“We know they don’t have money so they can bring in investors,” Cohen said, pointing to large global telcos.

He said only the six main mobile operators would be eligible to bid for 5G licences, leaving out the three virtual operators. Since there are only three networks in Israel - owned by Cellcom , Partner Communications and Bezeq unit Pelephone - companies will be encouraged to join forces and bid together.

“If in three years - 2020 to 2023 - companies invest in 5G we will give them back their money for the spectrum,” Cohen said.

Cohen’s deputy, Ofer Raz-Dror, said Israel’s 5G auction will not be like a recent one in Italy, where the country raised 6.5 billion euros ($7.4 billion) amid questions about the sustainability of investments for telecom operators facing tougher competition.

Raz-Dror said operators would not be required to deploy 5G in all of the country but would have to move away from 3G and improve 4G networks.

($1 = 3.7778 shekels)

$1 = 0.8777 euros Reporting by Steven Scheer; Editing by Mark Potter