July 2, 2019 / 2:19 PM / 16 days ago

Israel set to launch long-awaited 5G tender this month

JERUSALEM (Reuters) - Israel is likely to launch a long-awaited tender for fifth generation (5G) mobile networks within two weeks, a government spokesman said on Tuesday.

Despite its vibrant tech sector, Israel lags countries like South Korea, Switzerland, Britain and Spain that have already started to roll out 5G services, which are at least 10 times faster than 4G.

Israel’s Communications Ministry said late last year that it hopes to allocate frequencies by the end of 2019 with 5G networks to commercially launch between 2020 and 2023.

A spokesman for the ministry said on Tuesday that the tender would likely be in “a week or two”.

Israel’s two largest mobile operators, Cellcom and Partner Communications, declined to comment on their plans but given the high cost of around 2 billion shekels (£444 million), both are expected to join with rivals such as HOT and Golan.

Bezeq Israel Telecom unit Pelephone, Israel’s third-largest provider, said it planned to bid alone.

Israel’s three main telecom operators are struggling to stay profitable in a country with nine million people and nine mobile providers.

Revenues in the mobile sector fell 5.6% in 2018 but cash-strapped carriers will probably invest in 5G to bolster their networks to meet growing demand, analysts say.

“The continued decline in revenues raises a real concern for the upgrade required in cellular networks, which will enable Israel to keep pace with the global progress in this area,” the telecom regulator said in a report on Tuesday.

But it added that in the next few years a “new balancing point will be required between the level of technology competition and the level of price competition, so mobile companies will have sufficient incentive to make the large investments required by upgrading 4G networks and switching to 5G.”

The ministry has said that 5G is necessary to develop health, agriculture and education, as well as smart cities and self-driving cars.

Israel’s mobile phone industry was shaken up in 2012 with the entry of a host of new operators, sparking a price war that led to steep drops in subscribers, revenue and profit at the three incumbents. All-inclusive calling, surfing and text packages are still on offer at a rock bottom price of 29 shekels, or $8.

In 2018, Cellcom swung into the red with a loss of $17 million (£13 million), from a $30 million profit in 2017, while Pelephone’s profit plunged 75% to $7 million and Partner’s profits dropped 51% to $15 million.

Reporting by Steven Scheer; Editing by Susan Fenton

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