Cellcom and IBC After the Arrangement: temporary quiet does not close the exposure
The procedural arrangement with IBC reduces near-term cash friction by holding back disputed invoices and disputed guarantee draws during the legal process. But IBC's amended counterclaim still frames an alleged NIS 895 million expected non-payment through the end of the IRU agreement, so Q1 does not turn the IBC exit into a clean economic separation.
Cellcom received what looks like temporary quiet in the IBC dispute: a court-approved procedural arrangement that prevents disputed invoices during the proceeding and places a condition around disputed guarantee draws. But this is not a clean exit from the exposure left after the sale of the IBC stake. The arrangement keeps current payments alive on the basis of a 15% commitment out of up to roughly 2 million households, while IBC has already filed an amended counterclaim that alleges an expected non-payment of about NIS 895 million through the end of the IRU agreement. That figure is not a recognized debt and it is not a direct monetary claim of the same size. It is IBC's rough and non-binding estimate attached to declaratory relief. Still, it changes the test: after the sale reduced leverage and improved the balance sheet, the question is no longer whether cash leaves immediately tomorrow, but whether the legal process eventually sets boundaries that widen the economic obligation beyond the company's current operating framing. The next proof point is the combination of actual payment pace, guarantees that remain undrawn, and a decision on whether the 15% model really limits the IRU exposure.
The Arrangement Buys Time, Not Certainty
The prior IBC follow-up separated the sale of the equity stake from the remaining economic relationship under the IRU agreement. Q1 strengthens that distinction. The company is no longer an IBC shareholder, but it remains a material customer of the fiber infrastructure, with current payments, bank guarantees, and a legal dispute that can still affect how much of the sale value is truly free.
The procedural arrangement approved by the court on March 23, 2026 governs the period through a final judgment. The company will top up bank guarantees under the IRU mechanism up to NIS 50 million, only as long as IBC does not draw amounts that are in interpretive dispute. On the other side, IBC undertakes not to issue tax invoices for disputed payments, while the company undertakes to pay current amounts on time, including for Q4 2025, for the line package derived from the updated 15% commitment out of up to roughly 2 million households.
That is an important cash-flow relief because it reduces the risk that the dispute immediately turns into invoices or guarantee draws while the case is still open. It does not settle the economics. The arrangement itself says it does not impair either party's claims or rights and does not constitute an admission, so it works more like an interim management mechanism than a final resolution of the exposure.
| What Is Temporarily Settled | What Remains Open |
|---|---|
| Guarantee top-up of up to NIS 50 million | The top-up is conditional on no draw of amounts in interpretive dispute |
| No invoices for disputed payments | The underlying entitlement to those payments has not been decided |
| Current payments based on 15% of up to about 2 million households | It is not yet clear whether this is the final economic boundary of the IRU agreement |
| Per-line payment for additional lines purchased | No commitment to any percentage or volume out of IBC's actual deployment |
The NIS 895 Million Figure Is Not Recognized Debt, But It Resets The Reference Point
IBC's amended counterclaim is what prevents the story from ending with a technical arrangement. The amended counterclaim includes monetary relief of about NIS 16.5 million and declaratory relief. The declaratory relief is the more important part: IBC asks the court to declare that the company's conduct constitutes a breach of the IRU agreement, and an expected breach of it.
The large number appears in cautious but meaningful wording. IBC claims, based on information it holds including its planned deployment scope, that as of the original counterclaim filed in November 2025, the alleged expected breach reflects non-payment of about NIS 895 million through the end of the IRU agreement. The phrasing matters: this is IBC's rough and non-binding estimate, beyond the amount claimed in the original counterclaim. The company also says it cannot currently estimate the outcome of the proceeding.
This does not mean the company should immediately be burdened with a NIS 895 million liability. That would be unsupported. The meaning is narrower but still important: next to the message of temporary calm and interim operating order, the other side is already drawing a long-term exposure map for the court. The right read is that the arrangement lowers near-term cash friction, but does not cap the economics of the IRU dispute.
The 15% Boundary Is The Real Exposure Test
The most important detail in the arrangement is the separation between the current line package and additional lines. The company undertakes to pay for the package derived from an updated 15% commitment out of up to roughly 2 million households. For every additional line it chooses to buy beyond that, it will pay per line under the IRU agreement, without committing to any volume or any percentage out of IBC's actual deployment.
If that interpretation holds, the exposure becomes more manageable: there is current payment on a defined package, and additional purchases are optional and priced per line. If IBC succeeds in persuading the court that the conduct already creates a broader expected breach, the dispute expands from payment timing to contract boundaries. That is the difference between procedural quiet and a clean economic exit.
This also connects back to the company's balance-sheet thesis. The IBC sale helped reduce net financial debt, and by the end of Q1 net debt stood at about NIS 1.018 billion after bond repayments, free cash flow, and sale proceeds, partly offset by the dividend. The balance sheet is stronger, but as long as the IRU dispute remains alive, part of that improvement should still be tested against a legal and contractual exposure that has not yet received a final boundary.
What Would Turn Temporary Quiet Into A Real Exit
The arrangement with IBC improves the company's starting position inside the legal process: it blocks invoices for disputed amounts, sets a condition around guarantee draws, and preserves infrastructure services for purchased or future purchased lines. It does not end the dispute and it does not remove the NIS 895 million allegation. The current read is therefore mixed but clear: the immediate cash risk is lower, the long-term economic exposure is not closed.
The next filings should be read through three signals. First, whether the guarantees remain without additional draws. Second, whether current payments remain around the package defined by 15% of up to roughly 2 million households, without a jump in the obligation. Third, whether the legal process narrows or widens the declaratory dispute around expected breach of the IRU agreement. Until then, the IBC sale remains a strong balance-sheet move, but not a full separation from the exposure.
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