Bethel Finances: Cellular bid winners promise lower prices

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Bethel Finance news:

The new mobile carriers will chase after private customers and market prices will plummet - that is the main message delivered by Minister of Communications Moshe Kahlon at a press conference in Tel Aviv, to mark yesterday's tender, won by Mirs Communications Ltd. and 018 Xfone Communications Ltd.

Mirs paid NIS 705 million for the 3G bandwidths and Xfone paid NIS 710 million.

Xfone owner Hezi Bezalel said. "018 has already lowered its prices by 30%, so Kahlon's goal of a 50% reduction in mobile rates is not far off."

Mirs owner Patrick Drahi, who rarely speaks to the media, signaled that aggressive competition is on the way. "The more we pay in the tender, the more aggressive we'll have to be."

Drahi is also the controlling shareholder in cable TV, Internet access and telephony carrier HOT Telecommunication Systems Ltd. (TASE: HOT), and he may seek to merge the companies into a single telecommunications group.

At the start of the press conference Kahlon kidded, saying, "I have notified the winners that if they intend to cut rates by less than 50%, I'll take back their licenses. They were silent. Patrick does not understand much Hebrew, so it is better not to translate this, but Hezi understands perfectly."

Kahlon continued, "I believe that this is the last tender that can be held in Israel, at least for these technologies. There will be no more tenders. Maybe our grandchildren will have to publish new tenders, but this is the last tender for now. We were worried that the market was saturated, and that no one would participate, but I am pleased that this was not the case and people participated.

"There is room to lower mobile prices, and we hope that they will fall. Prices have somewhere to fall to - and sharply. This is a great push for the market, which has great economic importance."

As for the aggressive competition that he anticipates, Kahlon said, "If the tender winners want to make a return on their investment, they'll have to win a lot of private customers. To do this, they'll have to chase after customers; pamper them. That is what will happen. Power will return to the customer in the coming years; power will return to the private consumer. I never understood why the weak should maintain the strong; what's the logic in that? I believe that the strong should finance the weak."