The timetable for the Israel Electric Corporation (IEC) (TASE: ELEC.B22) fiber optic venture will probably be extended, after the bidders notified the tenders committee that they cannot submit binding bids together with a financing plan by mid-March, as scheduled. Firstly, there is great uncertainty about the lack of clarity about Minister of Communications Moshe Kahlon's policy, as he simply won't say what he plans to do.
Secondly, none of the bidders can present a financing plan to the banks within such a short time under such uncertain circumstances.
The bidders have raised the issue of conditions related to the venture's viability and about the private investors relations with IEC. The tenders committee told the bidders that regulatory issues related to the telecommunications industry are in the hands of the Ministry of Communications, not the tenders committee, which cannot therefore answer the bidders' questions.
The parties involved in the tender face growing pressure, because IEC realizes that the venture may not find bidders under its current terms. The lack of clarity about developments in the market and questions arising from HOT Telecommunication Systems Ltd's (TASE: HOT) last sales offer have had an effect, and the tender committee members realize that it is up to the Ministry of Communications to move the tender forward.
The bidders support the participation by mobile carriers Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) in the venture, with stakes of up to 10% each, as they will be the venture's potential customers. However, the carriers are demanding in exchange price controls on Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and HOT's infrastructures, and to compel them to sell infrastructures cheaply until the IEC venture deploys its fiber optic network nationwide.
Published by Globes [online], Israel business news - www.globes-online.com - on March 6, 2012
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