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Another Motorola Subsidiary Enters Israel's Cell Phone Race

Mirs in line to become country's fourth provider as U.S. firm looks to sell Pele-Phone.

Israeli Communications Minister Binyamin Ben-Eliezer will license

Motorola

(MOT)

subsidiary

Mirs

as Israel's fourth cellular provider, the

Ma¿ariv

newspaper reports.

Before granting its license, the minister will summon the three extant cellular providers --

Pele-Phone Communications

,

Cellcom

and

Partner Communications

(PTNR) - Get Partner Communications Co. Ltd. Report

-- to express their position.

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It may be assumed that Mirs' potential competitors will petition the

High Court of Justice

against the license on grounds of prejudicial treatment. Mirs has not participated in any tenders and will not be licensed on a competitive basis, they are expected to argue.

The director general of the communication ministry, Danny Rosenne, today said, "The possibility of making Mirs a cellular provider has nothing to do with the spectrum auction planned for early 2001," when the state plans to auction off four packages of frequencies for third-generation wireless services.

Rosenne said the frequencies Mirs is already licensed to use are enough for second-generation services. That means Mirs could become a cellular provider without winning the G3 bid. By mid-2001 there could, therefore, be at least five cellular companies in Israel.

Mirs' shareholders besides Motorola, with 67%, include

Ampal American Israel Corp.

(AMPL)

, with 25%.

Poalim Investments

is negotiating to buy Ampal's interest in the cellular carrier.

Motorola is seeking to sell its 50% of Pele-Phones, too. One contender is the Spanish phone company

Telefonica

(TEF) - Get Telefónica SA Report

, which wants to buy a group of Motorola's cellular operators around the world.

Meanwhile, Israeli tycoons Zadik Bino and Nochi Dankner, operating through

Ganden Holdings

and the

Israel Corp.

, have set up a new company that will today file an offer to buy Motorola's stake in Pele-Phone.

Ma¿ariv

reports that the company will be divided equally among its three founders: Bino, Dankner and advocate Ram Caspi, who formed the group.

The original group included

Merrill Lynch

and local brokerage firm

IBI

, but both pulled out.

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