There is no business like the telecommunications business. Every day has the potential for new drama. After new carriers Golan Telecom Ltd. and HOT Mobile Ltd. turned the market 180 degrees, Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) assumed the mantle of game changer, with a customer plan that reshapes how we buy telecommunications services and puts the communications needs of the family at the center.
How will its rivals respond? There is no question that they must do so, because this was no ordinary marketing move.
HOT Telecommunication Systems Ltd. (TASE: HOT) hurt Cellcom with the launch of HOT Mobile, and Cellcom is now aggressively fighting back, launching a frontal assault against HOT, which is the only carrier currently able to offer a full service package (without mobile). This is a brilliant move, because HOT cannot merge with HOT Mobile into a triple play package. It will take time before the Ministry of Communications will permit this, and Cellcom is sweeping the table in the meantime.
Although HOT offers cable television as a key component of its three services, the moment that Cellcom offer Internet Protocol television (IPTV), which it plans to launch soon, HOT will have a real problem.
Golan Telecom, controlled by Michael Golan, cannot deal with the offers by the telecommunications groups. In the new market structure, Golan Telecom will have to find solutions or continue its current line and take the risk that customers will choose the more economical alternative offered by Cellcom, and which the other carriers will unquestionably offer as well in the future.
Orange franchisee Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) has historically viewed Cellcom as a conservative company that lags behind developments, and does not initiate them. That was case when David Avner was Partner’s CEO, continued under Yacov Gelbard, and is to some extent still true under Haim Romano.
Partner was the first mobile carrier to respond to Golan Telecom and HOT Mobile’s low-cost all-inclusive plans, by establishing the 012 Mobile brand through its 012 Smile Telecom Ltd. subsidiary. But Partner is going through a difficult reconstruction under Romano who has to rebuild the company in the midst of a severe market crisis and during a change in ownership.
Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) faces the question, how long will the regulator continue to hem the carrier in and prevent it from competing on an equal footing against the other carriers. Bezeq is Israel’s strongest telecommunications group, with landline, mobile, ISP and international calls, and satellite television subsidiaries, but it cannot respond to the marketing moves of its rivals. Although it can lower internet prices, but this is unlikely to help it when the other groups sell services that Bezeq is banned from selling…Read More>>