Hot Mobile is now a leveraged signed deal and Keystone and Delek Israel each need to provide about NIS 207 million

The Hot Mobile transaction is no longer a negotiation headline. It is a signed acquisition agreement with a price, an ownership split and an initial financing structure. That is a material change from the previous analysis, where the missing link was exactly the price, financing and risk split between Keystone, Delek Israel and Lahav. The key number is not only NIS 1.218 billion. It is the split inside that number: about NIS 700 million is expected to be debt at Hot Mobile itself, without recourse to the buyer or its partners, and about NIS 518 million is expected to come from the buyer partners. Keystone and Delek Israel each account for about NIS 207 million of that partner layer, while Leumi Partners accounts for about NIS 104 million. That reduces the direct check written by each public anchor relative to the headline deal value, but it does not turn the acquisition into a clean infrastructure asset yet. The financing terms are not yet definitive, the regulatory approvals are still ahead, and the operating test is whether Hot Mobile's customer base and PHI stake can generate cash flow that services the debt and supports value creation.

What Is Signed, And What Is Still Open

The buyer is expected to acquire all Hot Mobile shares for consideration of about NIS 1.218 billion, subject to adjustments, leakage and transaction expenses. The ownership structure is 40% Keystone, 40% Delek Israel and 20% Leumi Partners. Delek Israel is a material associate of Lahav, which holds about 39.6% of Delek Israel, so Lahav's exposure is indirect through Delek Israel rather than a direct acquisition of Hot Mobile.

The main change is legal bindingness: the parties have moved from memoranda and extensions to an acquisition agreement. Closing is still subject to approval by the Ministry of Communications, approval by the Competition Authority, approvals from Hot Mobile financing entities, the accuracy of representations, performance of undertakings and the absence of a material adverse change. The timetable is 6 months from the filing of applications to the Ministry of Communications and the Competition Authority, with each party able to extend by up to another 3 months.

One more detail matters. Keystone and Delek are jointly and severally responsible for payment of the consideration by the buyer to the seller. At the same time, the planned bank debt is expected to be extended to Hot Mobile itself and without recourse to the buyer or its partners. The risk therefore does not sit in one place. Before closing, Keystone and Delek need to keep the closing path alive. After closing, Hot Mobile's cash quality and its ability to meet financial covenants will determine how comfortable the debt load is.

Financing Is The Core Of The Story

The deal is large in the headline, but the direct funding expected from the partners is much smaller than the full consideration. About NIS 700 million of the consideration is expected to be funded through a 10 year loan to Hot Mobile, at annual interest of Prime plus 0.5% to 1.5%, backed by pledges created by Hot Mobile. The loan is expected to include financial covenants, including debt coverage and debt service coverage ratios, as well as a Cash Sweep mechanism. That is not a technical point: a cash sweep can direct part of the cash flow to debt reduction before it becomes freely distributable to the owners.

This is where the market may misread the deal. Keystone describes the remaining NIS 518 million as equity to be provided by the partners according to their ownership shares. Lahav describes the same layer as shareholder loans to be provided by the partners. For investors, the wording does not change the cash amount that needs to arrive, but it does show that the final structure still has to move through financing, accounting and cash flow documents. If external financing cannot be obtained on reasonable terms, the partners' agreement provides that the funding will be injected through shareholder loans in proportion to the partners' holdings.

It is therefore wrong to read the NIS 1.218 billion headline as if Keystone and Delek Israel are bringing the whole amount from home. It is also wrong to read the transaction as already financed. At this stage there is a framework: about NIS 700 million of expected bank debt, about NIS 518 million of partner funding, and remaining uncertainty around a definitive financing agreement, final interest, pledges, covenants and the mechanism that channels Hot Mobile cash toward debt reduction.

Control Does Not Follow The Percentages Exactly

On paper, Keystone and Delek Israel each own 40% of the buyer, while Leumi Partners owns 20%. But the partners' agreement adds a layer of control that is not fully symmetric. Appointment of the chair and CEO of the buyer and Hot Mobile, as well as related party transactions, require Delek's consent as long as it keeps a minimum stake. In Lahav's filing, that threshold is defined as 30% of the buyer general partner.

That makes Delek Israel, and therefore Lahav indirectly, more than a simple ownership percentage. If Delek can bring Hot Mobile distribution through fuel stations, convenience stores and digital platforms, that control layer may justify a stronger management role. If the synergy remains a presentation idea, the same mechanism may look like another layer of complexity between the public company and the asset.

Leumi Partners is not a regular 20% investor either. There is a special mechanism for a scenario in which Hot Mobile is deemed a significant non-financial corporation under the Israeli concentration law. In that case, Leumi Partners may transfer its rights in the buyer to Keystone and Delek at a predetermined price and within a defined period, after which Keystone and Delek would own the buyer and Hot Mobile in equal shares. Leumi Partners is therefore both a source of equity for the transaction and a potential regulatory variable in the future ownership structure.

It is also important to separate Leumi Partners from the bank financing. The documents refer to the lender as a banking entity, but they do not say that this is Leumi. There is no basis to read the transaction as Leumi bank financing just because Leumi Partners is on the equity side. For the public bank, the currently measurable direct exposure is Leumi Partners' participation in the partner funding layer, about NIS 104 million, a very small amount relative to the bank's market value. For the transaction itself, Leumi Partners matters through ownership structure and regulatory flexibility, not through proof that the bank financing has already been signed.

Hot Mobile Must Prove Cash Flow, Not Just Infrastructure Language

The official narrative tries to frame Hot Mobile as a telecommunications infrastructure asset. There is a basis for that. Hot Mobile holds about 50% of PHI, the partnership that operates the cellular access network of Hot Mobile and Partner, with thousands of cellular sites, antennas, radio equipment and supporting infrastructure for 4G and 5G service. The network uses frequencies that are a limited national resource, which is closer to infrastructure language than ordinary consumer retail.

But the financial information disclosed is not enough to declare the asset stable infrastructure. Hot Mobile has about 2 million users, about 75% B2C and 25% B2B. In 2025 it generated revenue of NIS 1.373 billion, operating profit of NIS 60 million and net income of NIS 45 million. In the first quarter of 2026 it generated revenue of NIS 324 million, operating profit of NIS 37 million and net income of NIS 23 million. The first quarter looks stronger than the 2025 run rate, but it is too early to know whether this is an operating step-up or a good quarter inside a competitive mobile market.

There is also an asset perimeter change inside the deal: Hot Mobile's holdings in two non-core companies, held in equal shares by Hot Mobile and the seller, are expected to be transferred from Hot Mobile to the seller. The buyer is therefore not necessarily receiving every asset that sat inside Hot Mobile before the deal. For investors, the relevant question is not only the brand name. It is what cash flow remains inside the acquired company after the asset transfer, the new debt, the pledges and the Cash Sweep.

What Needs To Happen Now

The transaction is strong enough to justify a new analysis because it closes the bindingness gap that made the previous read provisional. It does not yet close the value gap. Three things need to happen before Hot Mobile can be treated as an infrastructure asset that Keystone and Lahav can measure with confidence: the definitive financing agreement needs to be signed, the regulatory approvals need to be received, and the first post-closing reports need to show how much cash remains after debt service and network investment.

Keystone gets telecommunications exposure that fits its infrastructure strategy, but it is adding another large transaction to a portfolio that already includes transport, energy, water and data centers. Lahav gets, through Delek Israel, the chance to expand Delek's consumer and infrastructure platform, but also takes on another funding commitment at associate level. Leumi Partners adds equity credibility and structural flexibility, but the regulatory mechanism could make it a temporary partner. The market does not need another Hot Mobile headline. It needs to see whether the debt closes on terms that allow Hot Mobile to service it without choking distributions to owners, and whether Delek Israel brings a real commercial edge rather than another holding-company layer.