Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) has pulled out of the Israel Electric Corporation (IEC) (TASE: ELEC.B22) fiber optics venture, due to the lack of regulatory clarity for the telecommunications infrastructure project, which prevents proper planning. Elbit Systems' board of directors made the decision following a presentation by the team that was working on the tender.
After two bidders in the IEC tender - Elbit Systems and a consortium led by Ram Belinkov - met with the tenders committee last week, they made it clear that without major changes in the tender's terms, they will not bid in it. Both groups mentioned the same problems: the lack of regulatory clarity, and the planned partnership with IEC.
They said that they could not participate in the venture without guaranteed customers. Mobile carriers Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) are currently the only two carriers that would use IEC's infrastructure so that they can provide landline telephony services, but the Ministry of Communications wants Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and HOT Telecommunication Systems Ltd. (TASE: HOT) to make their infrastructures available to the mobile carriers, rendering the IEC venture bereft of customers. The bidders said that they cannot trust the state to stand by the terms it set. One of the bidders mentioned the cable companies' merger, when the state set regulations that hurt the companies.
Tenders committee chairman Zvi Harpak told the bidders that most of their questions would be sent to the Ministry of Communications, and advised them to meet Minister of Communications Moshe Kahlon to outline their concerns.
Published by Globes [online], Israel business news - www.globes-online.com - on March 11, 2012
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