At the request of its shareholders, Israeli mobile communications provider Cellcom has discontinued negotiations to set up a joint venture with Eurocom. The JV was supposed to compete with state-run monopolistic phone company Bezeq in the domestic market.

Cellcom yesterday informed Eurocom subsidiary Ofek The New World that following demands by its major shareholder BellSouth, the negotiations are over.

On Wednesday, BellSouth's attorney, Yoav Ben Dror, informed Cellcom that BellSouth refused to accept certain commmitments that the JV was planning to undertake in accordance with the terms of the license it would request from the Communications Ministry.

BellSouth demanded that Cellcom refuse access to its fiber-optic network to the JV, and that it engage only in LMDS wireless communication. BellSouth's demand contradicts the business and engineering plans drawn up by Cellcom and Ofek.

Intense talks between the sides failed to bridge the divide and yesterday, Cellcom CEO Jacob Perry was left with no choice but to inform the Communications Ministry that the joint venture was off.

After almost a year of contacts, the mood was despondent at both Cellcom and Eurocom yesterday in the wake of the cancellation of the venture.

Top sources at Cellcom alleged that BellSouth knew full well that its demands would sink the venture.

BellSouth's move was in contradiction to announcements by the company's European representatives that they supported the venture.

BellSouth has said in the past that it wishes to sell its holdings in European communications companies, including its 35 percent stake in Cellcom, and the scuttling of the joint venture will be seen as a covert move to pressure other shareholders in Cellcom, the Safra family in particular, to buy its share in the company.