Report: Fearing Bankruptcy, Customers Fleeing Golan Telecom

YERUSHALAYIM -
An advertisement poster for Golan Telecom in a shop. Photo by Lior Mizrahi/Flash90
An advertisement poster for Golan Telecom in a shop. (Lior Mizrahi/Flash90)

As rumors continue to spread that low-cost cell phone service operator Golan Telecom is likely to go out of business, customers have begun dumping the service – creating the possibility that the rumor could turn into reality. In April alone, some 28,000 customers moved on to other companies, fearful that the sudden closure of Golan could jeopardize their cell phone service.

Although he admits that the company is facing problems, Golan chairman Michael Golan said Sunday that the company was not going anywhere, and would continue to strive to avoid bankruptcy. “Although the current situation is worrying, we intend to continue fighting to preserve the low-cost cellular service revolution, and to promote it,” Golan wrote in a social media post.

Golan Telecom was the first low-cost cell phone service provider in Israel, cutting the charges of veteran companies Pelephone, Cellcom and Orange (Partner) by tens of percent. As a result of Golan Telecom’s approach to business, Israelis save hundreds of shekels on their cell phone bills, forcing the veteran companies to cut costs – and to lay off workers and downsize, as the low-cost revolution ate into profits.

Apparently, though, Golan lowered rates too much, leading to the current situation. While it is not at all certain that the company will really go under, the Communications Ministry has contingency plans at the ready to move Golan’s customers to other companies.

The solution, according to Golan, is for the government to approve a proposed merger with Cellcom, which the Antitrust Authority opposes. Golan claims that unless the deal is approved, his company will go out of business, leaving a million customers stranded.

In the past month, veteran cell phone service firms Pelephone and Cellcom have gained about 2,500 new customers each, while Partner (formerly Orange Israel) gained about 1,400. The biggest “winner” was new low-cost service provider Hot Mobile, which gained over 3,000 new customers during the period.