Gilat Satellite Networks Ltd. (Nasdaq: GILT; TASE:GILT) today signed new agreements with Colombia's Ministry of Communications, for the provision of satellite services under the Compartel I, Compartel II and Telecentros projects, which were awarded to Gilat’s Colombian subsidiaries in 1999 and 2002.
The new terms to the agreements include the removal of thousands of telephony sites, which are no longer needed or used by the rural population in Colombia and the upgrade of technology, primarily in existing sites, entailing additional capital expenditure by Gilat. The new agreements also include modification of the terms of existing agreements, the release of about $24 million from trust accounts, which can now be recognized as revenue by Gilat, and a release by each of the parties from all prior claims under the previous agreements. Gilat expects that most of the amount in the trusts will be released during 2009, with the remaining amount to be released in 2010.
Gilat’s chairman and CEO Amiram Levinberg said, “We have been looking forward to this contract signature for a very long time and are glad that we reached this stage. We are hopeful that these newly negotiated agreements will better meet the needs of the Colombian rural populations and will also enable Gilat to be properly paid for services provided.”
Gilat's share rose 3.6% on Nasdaq yesterday to give a market cap of $91 million. In mid-afternoon trading today on the TASE Gilat's share had risen 19.65% to NIS 10.08 per share.
Published by Globes [online], Israel business news - www.globes-online.com - on December 31, 2008
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