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Israel holds 5G mobile network tender, aims for 2020 launch

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07/14/2019 | 10:02am EDT

JERUSALEM (Reuters) - Israel launched a tender for fifth-generation (5G) cellular frequencies on Sunday, hoping discounts to cash-strapped mobile phone operators battling fierce competition will entice bids.

The telecoms regulator expects three groups to bid, including a combination of operators to cut down on costs. It expects to announce winners by the end of the year with a commercial launch to start in 2020 and continuing through 2023.

"We are aware of the companies' current financial situation and the tender takes this into account," said Communications Minister David Amsalem.

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

Israel's three main telecom operators -- Cellcom, Partner Communications and Pelephone -- are struggling to stay profitable in a country with 9 million people and nine mobile providers after a sector shake-up in 2012.

In the shake-up a host of new operators sparked 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 on offer at a price of 29 shekels, or $8, a month.

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

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.

As part of the tender, Israel is auctioning frequencies ranging from 700 MHz and 2100 MHz, which are also used for 4G, to 2600-3800 MHz that will solely be used for 5G services, such as self-driving cars.

Israel is offering incentives of up to 500 million shekels (112.15 million pounds), including delaying the need to pay for the licence until 2022. The Communications Ministry will give grants to operators who deploy at least 250 5G antennas.

"We built the tender so it might not cost anything to the companies," said Ofer Raz-Dror, deputy director general of the ministry, adding Israel will not follow the high-priced tenders in Italy and Germany.

Cellcom and Partner, declined to comment on their plans but smaller rival Golan Telecom said it would bid together with Cellcom. Another provider, HOT Telecom, is believed to be bidding with Partner. Pelephone, a unit of Bezeq Telecom, also said it would participate.

"Golan will participate in the frequency tender because ... it is important for us to be at the forefront of progress and to give our customers a quality network," the company said.

(Reporting by Steven Scheer; editing by David Evans)

By Steven Scheer

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