Cellcom Israel announces network and site sharing agreements

NETANYA, ISRAEL: Cellcom Israel Ltd announced it has entered an agreement with Pelephone Communications Ltd, and Golan Telecom Ltd, for the construction and operation of a shared 4G radio network, an agreement with Pelephone for the sharing of passive elements of cell sites for existing networks, and an Indefeasible Right of Use ("IRU") agreement with Golan, regarding the Company's 2G and 3G radio networks.

Nir Sztern, CEO, Cellcom Israel, said: "The Israeli cellular market will face continued challenges in the coming years to deliver the demand growth for cellular data. The agreements will enable multiple players the ability to compete and offer cutting edge services while investing in infrastructure. The network sharing agreements will help reduce the number of cell sites and the reduced cost will help maintain competition to the benefit of the Israeli consumer."

As for the 2G and 3G IRU agreement with Golan, Sztern said: "We are very pleased that Golan has elected to continue its cooperation with Cellcom. It is a vote of confidence in the Company's quality service, of which Golan has benefited, from the date it has commenced its operations."

4G radio network

The three operators will cooperate in obtaining frequencies for the 4G network. The 4G radio network is to be constructed and operated by a separate, newly created entity that will be equally owned by the Company and Pelephone and overseen by a steering committee comprised of representatives of all three operators and which shall make the strategic decisions regarding the 4G network by majority vote.

Each operator will be required to purchase and operate its own core network. Costs shall generally be divided equally among the three operators, subject to certain conditions and limitations set in the agreement. The Agreement is generally for a period of at least 15 years.

Passive cell site sharing

The newly created entity, equally owned by the Company and Pelephone, will manage and maintain all of the passive elements of cell sites and unify passive elements of cell sites of the Company and Pelephone, currently used for the 2G and 3G networks and will also manage and maintain the radio networks for the Company and Pelephone, generally for a period of at least 15 years.

Costs shall be divided generally between the Company and Pelephone, subject to certain adjustments. Each operator shall bear its own costs for such services and will continue to operate its own core network.

2G and 3G IRU

Golan will be granted aright of use to the Company's 2G and 3G radio network (generally for at least five years and for as long as they are operational), which will be replacing Golan's current national roaming agreement with the Company. Golan shall continue to operate its own core network.

Effectiveness of the Agreements are all subject to the approval of the Ministry of Communications ("MOC") and the Israeli Antitrust Commissioner to all the agreements. We can provide no assurance that such approvals will be granted.

The Company expects the sharing agreements, if will be executed, to result in substantial operating expenses and CAPEX savings to the Company, dependent on the amount and terms of passive cell site sharing that the newly created entity succeeds in accomplishing and the 4G radio network roll out.