Confirmation of the winner in the tender for the Israel Electric Corporation's (IEC) (TASE: ELEC.B22) fiber optic venture will probably not be forthcoming next week, because the tenders committee has not completed its work.
Cisco Systems Inc. (Nasdaq: CSCO) is the main financial backer and dominant partner in the fiber optic venture with Sweden's ViaEuropa AB. Cisco considers the venture as an exceptional opportunity to promote investment in fiber optics to replace current copper-based networks, as used by Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ), and coaxial cable networks, as used by Hot Telecommunication Systems Ltd. (TASE: HOT.B1).
The fiber optic venture is the first collaboration between IEC and the ViaEuropa-Cisco consortium, which includes Israeli companies, to deploy fiber optic cable to households nationwide. Cisco is providing supplier credit to the venture, which will buy the company's technology.
The IEC fiber optic venture is intended to compete against Bezeq and Hot by offering its services to telecommunications carriers to provide their services via its network. This means that if ISPs Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) wish to reach customers' homes, instead of using Bezeq and Hot's infrastructures, they will be able to use the new fiber optic cables that the venture will deploy to homes. The new venture's advantage is that it will use IEC infrastructures to deploy fiber to the home, greatly shortening the deployment's timetable and cost.
IEC's board of directors met this week to receive an update from the tenders committee, which told the board that it believed that it would complete the work on ViaEuropa's proposal by next week, but that there were still outstanding issues on how the venture's partners would work with IEC, and so the new deadline for announcing the consortium as the tender winner will be delayed until early July.
Under the timetable, immediately after the ViaEuropa consortium is declared the tender winner, it will provide financial guarantees, and only then will the deal will be closed, and the joint company that will be founded will be able to obtain the license from the Ministry of Communications.
Published by Globes [online], Israel business news - www.globes-online.com - on June 13, 2013
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