Israel to Return to ‘Bad Old Days’ of High Cellphone Costs?

Is the era of cheap cellphone service in Israel coming to an end?

Following the announcement Wednesday by Golan Telecom CEO Michael Golan that the company is putting itself on the market, sources at Israel's Cellcom said the company was likely to make a bid for the discount cellphone service provider.

Golan was the first discount service firm, established four years ago when current Finance Minister Moshe Kahlon, in his capacity as Communications Minister, legislated the opening up of the country's cellphone service, requiring the “big three” companies – Pelephone, Cellcom, and Partner (Orange Israel) to provide bandwidth to upstart firms.

The result was a wave of competition that pushed prices down, cutting the bills of many Israelis by half or more of what they had previously paid.

While there are numerous independent discount cellphone service companies in the market now, Golan is the biggest and most successful, and is considered the most reliable in terms of service and coverage.

An acquisition by Cellcom, or one of the other large established cellphone firms, would not necessarily bring prices up right away, but consumer activists fear that prices could begin a gradual move upwards – bringing Israel back to the “bad old days” when families spent hundreds, if not thousands, of shekels for cellphone service.

Shares of Cellcom shot up on the Tel Aviv Stock Exchange Wednesday after Golan's announcement.

In a statement, the company said that “it is not definite that Cellcom will make an offer for the purchase of Golan, and we cannot evaluate the impact of this purchase on the company, if it takes place at all.”


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