Israel’s Electra Consumer Products Ltd (TASE: ECP) agreed to acquire mobile phone operator Golan Telecom Ltd. for 350 million shekels ($91 million). As part of the deal, Golan Telecom signed a 10-year network sharing agreement (NSA) with Cellcom Israel Ltd. (NYSE/TASE: CEL), the largest Israeli cellular provider, which said it will lend Golan 130 million shekels upon the closing of its buyout by Electra.
The deal is subject to regulatory approvals from the Israeli Antitrust Commissioner and the Ministry of Communications.
The average annual revenue for Cellcom under the NSA is expected to range between approximately 210-220 million shekels plus VAT taxes, depending on Golan Telecom’s number of subscribers, and their usage of the Shared Network and Cellcom’s 2G network.
“Cellcom congratulates Electra Consumer Products for purchasing Golan Telecom and entering the communications market. The network sharing agreement facilitates Cellcom’s continued leadership of the Israeli cellular market alongside a continued investment in future technologies,” said Cellcom CEO Nir Sztern.
Founded in 1951, Electra has maintained its position as a leader in the consumer products and retail sectors in Israel. Electra is a manufacturer, importer, exporter, marketer and distributor of well-known international and local brands in air conditioners, home water purifiers, major appliances, small appliances and consumer electronics.
As the sole air conditioning manufacturer in Israel, with a 42% share of the local market, ECP is the country’s dominant full service provider for residential and light commercial systems. The company owns and operates two retail chains for home electronics and appliances, as well as a major DIY and auto parts chain, with dozens of branches located throughout Israel. The company is said to employ a staff of over 2500.
Electra operates a worldwide distribution network of subsidiaries and local agents, with an emphasis on Europe, Asia, South America and Australia. Brands include Airwell, Electra, Seveso Clima, Shekem Electric, Wesper, Johnson Aire Acondicionado and Elco.
Golan was launched in 2012 after the Israeli government issued new licences to boost competition in a sector that had been dominated by three players. Golan has taken about 10 percent of Israel’s mobile market by offering rock-bottom prices, hurting Cellcom and main rivals Partner Communications and Pelephone, a unit of Bezeq Israel Telecom , which are now barely profitable, according to Reuters, which added that Cellcom tried to buy Golan in 2015 for about $300 million but was blocked by regulators.
Cellcom Israel, founded in 1994, provides a broad range of mobile services to approximately 2.8 million cellular subscribers. The company operates an LTE 4 generation network and an HSPA 3.5 generation network enabling advanced high speed broadband multimedia services, in addition to GSM/GPRS/EDGE networks, as well as OTT TV services.