Pelephone Signs Deal to Acquire Wecom Mobile for NIS 265 Million After Failed Hot Mobile Bid

In recent months, Pelephone, part of the Bezeq Group, attempted to acquire its competitor Hot Mobile. Despite Pelephone's highest offer, Hot Mobile's seller, Altice owned by Patrick Drahi, chose a "safer" bid from a group led by Delek Israel due to better regulatory approval prospects. This week, Pelephone revealed it is still pursuing expansion through acquisitions and signed a memorandum of understanding to purchase Wecom Mobile for NIS 265 million.

Wecom, currently controlled by the ClearMark fund specializing in turnaround investments, was acquired by ClearMark in 2021 after financial difficulties under previous owner Hezi Bezalel, who remains a minority shareholder. The deal includes a 60-day exclusivity period, extendable by 30 days, during which both parties are committed to finalize the agreement. Wecom serves over 300,000 mostly private subscribers, holding about 3% of the Israeli cellular market.

Bezeq stated to the stock exchange that Pelephone's acquisition of Wecom aligns with its growth strategy, expecting synergies contributing NIS 50 million in the short term and NIS 100 million long term, mainly from operational, network, and frequency cost savings. Unlike other providers, Wecom operates solely in cellular services without fixed-line or equipment sales, enabling Pelephone to offer additional services such as roaming to Wecom customers post-acquisition.

The Israeli cellular market is highly competitive with relatively low prices globally. Industry trends favor mergers and acquisitions to boost network investments for next-generation cellular technologies. Pelephone anticipates regulatory approval partly because Wecom is a smaller operator compared to Hot Mobile's nearly 2 million customers, and due to the investment rationale in network development. Wecom currently uses Cellcom's network under a 10-year agreement from 2017 worth NIS 250-300 million. Pelephone's network serves about 3 million subscribers, including those of Rami Levy, while Cellcom and Partner each serve around 4 million.

The acquisition, if completed, will add approximately 100 employees to Pelephone. The deal reflects Pelephone's strategic move to strengthen its market position and invest in future network capabilities amid a consolidating Israeli telecom sector.