The dilemma: potential UAE investment in the Israeli telecom sector

The Israeli telecommunications sector is seen as "the holy of holies" of the country's internal security services, namely the Israel Security Agency and the Police. It is a market in which telecommunication companies supply cellular and fixed-line services, and allegedly, ownership, even partial, of a company could supply foreign intelligence services with access to collection of intelligence in Israel. This dilemma became apparent with the Hutchinson company's partial ownership of Partner Communications. Until today the topic is stuck at the Communications Ministry. This is despite that the company stock belongs to Hutchinson, and Partner operates in Israel cellular services and fixed-line communications including rights to 5G frequencies.  

The issue with Hutchinson is allegedly its connection with China. A connection that the company denies. Israel, in this context, is a soldier on the global chessboard in the struggle between China and the US. The White House wants cellular networks "clean" of Chinese presence, and Israel is on the list of the good countries that do not operate Chinese-made major telecommunications equipment. Furthermore, sources in the Communications Ministry claim that ownership of a company has no significance as long as the extent of Israeliness is maintained. In the case of Hutchinson, the identity of the owner doesn't matter to the country as long as the management is Israeli, and the management is carried out under the supervision of the Communications Ministry.    

At least, that's the theory. What will happen if tomorrow Huawei wants to buy a stake in Bezek or Cellcom? Without pushing its products. Just for the purpose of ownership. Would the State of Israel welcome the move? Highly doubtful. Talk is one thing, and decisions are another. In the end, the White House hangs like a sword of Damocles over the Communications Ministry and the Israeli government. At least as far as Chinese or Russian ownership of Israeli telecommunications companies is concerned.  

This raises the question of investments from the UAE. The first among the Persian Gulf states to normalize relations with Israel. An economic peace agreement by nature. It is a country with a lot of money that is looking for smart investments, including in technological sectors. What if it decides to buy part of Bezek, Cellcom or Partner? How will this be received by the Communications Ministry and the Israel Security Agency?

There is no doubt that the liberalness that the Communications Ministry demonstrates to the outside world in terms of investments in the Israeli telecommunications market, at least in part, is a cover. One whose goal is to enable the maintaining of the "Westernization" of control of Israeli telecommunication companies without Israel being perceived as a country that restricts investments. And the investments are wanted. The telecommunications market is in a decline in terms of income at a time when many investments are needed for deployment of high-quality 5G network and optic fibers.