Cellcom hits Xfone with lawsuit as IBC investment is approved

Cellcom issues legal challenge to Xfone as IBC investment is approved

Israel’s Cellcom has filed a lawsuit in the Tel Aviv District Court accusing its rival Xfone of illegally terminating their network sharing agreement.

According to CommsUpdate, Xfone failed to pay its dues under the terms of the agreement for both November and December 2020, before sending Cellcom an annulment notice for the deal in January 2021. The network sharing agreement was originally cleared by Israel’s Ministry of Communications in March 2017.

Xfone argues that Cellcom has materially breached their agreement with its acquisition of Golan Telecom’s share capital. Following the purchase, Cellcom terminated Golan’s mobile operating licence.

Cellcom has dismissed Xfone’s allegations and initiated legal action to enforce the agreement and demand the unpaid dues totalling approximately ILS34 million (US$10 million). To this end, it has filed for an interim injunction that seeks to block Xfone from forming any network sharing agreement that would contradict its deal with Cellcom.

In a separate development, Israel’s Ministry of Communications (MoC) has cleared Cellcom’s proposed investment in IBC (Israel Broadband Company), which the operator will conduct together with the Israel Infrastructure Fund (IIF) and Hot Telecommunication Systems.

The proposal was recently approved by the Israeli Competition Commissioner, with Cellcom noting at the time that the approval of the MoC would “complete… the regulatory approvals and changes required for the completion of the transaction.” The deal is therefore expected to close imminently.

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