NETANYA, Israel, January 3, 2017 /PRNewswire/ --
Cellcom Israel Ltd. (NYSE: CEL) (TASE: CEL) (hereinafter: the
"Company") announced today that following previous reports
regarding negotiations with third parties interested in purchasing
Golan Telecom Ltd. ("Golan Telecom")'s share capital and a
liquidation request filed by the Company against Golan Telecom in
relation to which the court referred the parties to a mediation
process, the Company entered a mediation agreement with Golan
Telecom (the "Mediation Agreement") and a 3G and 4G network sharing
and 2G hosting services agreement (the "Network Sharing Agreement"
or "NSA"), with Electra Consumer Products Ltd. ("Electra") an
Israeli public company which simultaneously entered an agreement
with Golan Telecom and Golan Telecom's shareholders to purchase
Golan Telecom's share capital (the "Share Purchase Agreement by
Electra" or SPAE).
Nir Sztern, the Company's CEO
said: "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."
The main provisions of the Network Sharing Agreement, as shall
apply to Golan Telecom when owned by Electra, include the
following:
- The Agreement shall become effective upon and subject to the
receipt of any required regulatory approval including the Antitrust
Commissioner and the Ministry of Communications' approvals and the
closing of the SPAE (which is also subject to regulatory approvals)
(the "Effective Date").
- 3G and 4G network sharing - The parties will cooperate in the
development of a shared 3G and 4G network and future technologies
(the "Shared Network"), which will use both parties' 3G and 4G
frequencies, to be operated by a separate, newly created entity or
NewCo, that will be equally owned by the parties. Each of the
Company and Golan Telecom shall own or receive an Indefeasible
Right of Use, or IRU in the active elements of the Shared Network,
in equal parts and will grant each other and NewCo an IRU in the
active elements of the Shared Network. To that end, Golan Telecom
will purchase from the Company an IRU in half of the active
elements of the existing 3G and 4G network owned by the Company.
Future ongoing investments in such active elements shall be equally
borne by the parties. Each party will operate its own core network.
The Company shall further provide Golan Telecom and NewCo an IRU to
the Company's passive elements of the Shared Network. The Company
shall provide services to NewCo as a subcontractor.
- 2G hosting services - the Company shall provide Golan Telecom
hosting services in relation to its 2G network.
- Term - the Agreement is for a term of ten years commencing on
the Effective Date. The termination of the NSA prior to the lapse
of the first 10 years due to its breach by Golan Telecom, shall
entitle the Company to an agreed compensation of NIS 600 million plus VAT.
- Consideration - The average annual consideration for the
Company under the NSA during the Term (starting with lower annual
payment and increasing over the Term), is expected to range between
approximately NIS million 210-220+VAT, depending on Golan Telecom's
amount of subscribers and their usage of the Shared Network and the
Company's 2G network. Such consideration includes the following
components:
- IRU to half of the active elements of the existing 3G and 4G
network owned by the Company and minimum future investment by Golan
Telecom in active elements of the Shared Network.
- IRU to the Passive network;
- Operation costs of the Shared Network and the 2G network (both
active and passive), to include a fixed component to be borne
equally by the parties, subject to certain discount arrangements
dependent on Golan Telecom's subscribers amount, and a variable
component to be borne by the parties according to the parties'
relative usage of data by their subscribers;
- The Consideration also resolves the previously reported past
national roaming payment differences.
- Loan - Upon closing of the SPAE, the Company will lend Golan
Telecom the sum of NIS 130 million
for a period of 10 years and repaid in 6 semi-annual equal
installments beginning the 8th year of the Term (interest and CPI
differentials shall accrue and repaid as of the 6th year). The loan
shall be guaranteed by a second degree floating charge on Golan
Telecom's assets and rights or an equivalent guaranty.
- Interim Period - The NSA includes arrangements in relation to a
possible interim period commencing upon the closing of the SPAE if
closed prior to the receipt of regulatory approvals to the NSA and
until the closing of the NSA. Those include the continued exclusive
purchase of national roaming services by Golan Telecom from the
Company, for a consideration equal to that stipulated under the NSA
as well as an agreed compensation in the sum of NIS 600 million plus VAT in the event such
purchase is stopped other than following closing of the NSA .
- The NSA includes certain arrangements for separation and adding
another sharing party at similar terms to those of Golan Telecom,
including arrangements with regard to Marathon 018 Xfone Ltd.
(whose network sharing agreement with the Company was approved by
the Antitrust Commissioner and awaits the Ministry of
Communications' approval).
The main provisions of the Mediation Agreement with Golan
Telecom include the following:
- Upon Golan Telecom entering the SPAE -
- Golan Telecom shall pay a reduced monthly payment for the
national roaming services provided as of May
2016 and to be provided until the closing of the SPAE and
waiver by the Company of the difference between the monthly payment
under the current agreement (NIS 21
million) and the agreed reduced payment for that
period.
- Annulment of the share purchase agreement entered by the
Company and Golan Telecom and Golan Telecom's shareholders on
November 2015.
- Dismissal of legal actions filed by the Company and Golan
Telecom against each other.
- The agreement further includes arrangements in case the SPAE is
not closed within a certain period, including a continuation of the
mediation process and reduced monthly payment for national roaming
services to be provided by the Company for a certain period and the
right to resume legal actions, including with relation to the past
national roaming payment difference.
For additional details see the Company's most recent annual
report for the year ended December 31,
2015 on Form 20-F, filed on March 21,
2016, under "Item 3. Key Information - D. Risk Factors -
Risks Related to our Business - We face intense competition in all
aspects of our business" and "- Risks Related to the Proposed
Acquisition of Golan Telecom Ltd." and "Item 4. Information on the
Company - B. Business Overview - General - Agreement for the
Purchase of Golan", "- Network and Technology - Network and Cell
Sites Sharing Agreements" and under "- Competition - Cellular" and
"- Government Regulation - Additional MNOs", and the Company's
current reports on Form 6-K dated August 10,
2016, November 14, 27 and 29,
2016.
Forward looking statement
The information included in this press release contains, or may
be deemed to contain, forward-looking statements (as defined in the
U.S. Private Securities Litigation Reform Act of 1995 and the
Israeli Securities Law, 1968). Said forward-looking statements,
relating to the execution of the NSA and the benefits therefrom,
are subject to uncertainties and assumptions about the receipt of
the necessary approvals and the closing of the SPAE, the parties'
ability to execute the contemplated arrangements and the
Israeli telecommunication market condition. The actual conditions
the Company may face could lead to materially different outcome
than that set forth above.
About Cellcom Israel
Cellcom Israel Ltd., established in 1994, is the largest Israeli
cellular provider; Cellcom Israel provides its approximately 2.822
million cellular subscribers (as at September 30, 2016) with a broad range of value
added services including cellular telephony, roaming services for
tourists in Israel and for its
subscribers abroad and additional services in the areas of music,
video, mobile office etc., based on Cellcom Israel's
technologically advanced infrastructure. 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. Cellcom Israel offers
Israel's broadest and largest
customer service infrastructure including telephone customer
service centers, retail stores, and service and sale centers,
distributed nationwide. Through its broad customer service network
Cellcom Israel offers technical support, account information,
direct to the door parcel delivery services, internet and fax
services, dedicated centers for hearing impaired, etc. Cellcom
Israel further provides OTT TV services (as of December 2014), Internet infrastructure (as of
February 2015) and connectivity
services and international calling services, as well as landline
telephone communication services in Israel, in addition to data communication
services. Cellcom Israel's shares are traded both on the New York
Stock Exchange (CEL) and the Tel Aviv Stock Exchange (CEL).
For additional information please visit the Company's
website http://investors.cellcom.co.il/
Company Contact
Shlomi Fruhling
Chief Financial Officer
investors@cellcom.co.il
Tel: +972-52-9989755
Investor Relations Contact
Ehud Helft
GK Investor & Public Relations In partnership with LHA
cellcom@GKIR.com
Tel: +1-617-418-3096
SOURCE Cellcom Israel Ltd.