The partners in Israel Electric Corporation's (IEC) (TASE: ELEC.B22) fiber-optic venture, led by ViaEuropa AB and Cisco Systems Inc. (Nasdaq: CSCO), are aiming high. Sources inform ''Globes'' that they will offer households 1-gigabyte per second (Gbps) Internet access speed. Some of the venture's partners said that lower speeds would suffice, but they ultimately settled on 1-Gbps as the standard speed.
Last week, IEC executives outlined the venture and its progress to Minister of Communications Gilad Erdan, and expressed cautious optimism about concluding the tender process and selection of the only bidder in it - ViaEuropa Israel Ltd.
So far as is known, few countries offer such high Internet access speeds via fiber optics to households. South Korea stands out on this point, but most countries have up 100-Mbps to households, even though fiber-optic infrastructures can offer unlimited speeds. In Israel, Hot Telecommunication Systems Ltd. (TASE: HOT.B1) is offering 100-Mbps, and Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) is prepared to offer 100-Mbps over its fiber-optic network that it is now laying. Both companies will have to taking IEC's venture into account, although neither company believes that it will get off the ground and become a real threat in the long term.
ViaEuropa will own 50% of the venture through a designated company which will be established, ViaEuropa Israel. Its partners will own the other half of the designated company, which will own 60% of IEC's fiber-optic venture, with IEC owning the balance. ViaEuropa Israel is the only bidder in the tender, rendering the concept of tender meaningless, but it still had to meet the tenders committee test to prove its seriousness. ViaEuropa's Israeli partners in ViaEuropa Israel are the Zisapel brothers' Bynet Data Communications Ltd., Pujo Zaboludowicz's Tamares Telecom Ltd., BATM Advanced Communications Ltd. (LSE: BVC; TASE: BATM), and Rapac Communication and Infrastructure Ltd. (TASE: RPAC), each of which owns 12.5%.
Under the venture's timetable, the tender process is due to be completed by mid-June, and households will start being hooked up within 18 months. The rapid deployment is made possible by piggybacking on IEC's current fiber-optic network and use of the utility's transit rights to reach customers.
Submitting the guarantees is the tender's first step, and ViaEuropa's bid is now being reviewed in detail. When the deal is closed following the review, ViaEuropa Israel's members will deposit NIS 100 million in the company, and provide an additional NIS 200 million in guarantees. The government has promised NIS 150 million in aid. The venture will have NIS 600-700 million equity in the first stage.
The venture's fiber-optic network will cover 65% of Israel's population within nine years, and the rest of the population within twenty years.
Published by Globes [online], Israel business news - www.globes-online.com - on May 5, 2013
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