Bidders' demands to change the tender terms for the Israel Electric Corporation (IEC) (TASE: ELEC.B22) fiber optic venture could lead to major changes, effectively creating a completely new tender. Yesterday, Minister of Communications Moshe Kahlon explained the significance of changing the tender's terms.
However, participants at yesterday's meeting examined ways to avoid making changes that would cause delays, while allowing more bidders to participate in the tender. The tenders committee apparently concluded that its dependence on the two bidders in the tender does not bode well, and it is seeking ways to in increase the number of bidders without greatly deviating from the tender timetable.
The two consortia in the tender are led by Ram Belinkov, and Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT). Two other consortia have registered for the tender, but are not considered leading contenders who will go all the way: Sweden's ViaEuropa AB and BATM Advanced Communications Ltd. (LSE: BVC).
Nevertheless, as things stand now, there may be no alternative to postponing the tender by several months, if the Ministry of Communications wants new investors to bid in it, because it will take considerable time to learn about the project. It is not clear whether any new parties would be able to find investors.
Possible changes to the tender include extending the deployment period of the fiber optic network, easing universal service requirements, and allowing the direct sale of services to large business customers. Some amendments affect the venture's provisional license and other affect the tender terms, which means that the viability of project is currently problematic. It cannot be ruled out that the project will require rethinking, and a legal review is underway to examine the significance of the changes that the bidders want to be made to the tender.
Published by Globes [online], Israel business news - www.globes-online.com - on March 19, 2012
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