The company will receive $55 million from Motorola in exchange for the cancellation of the buy back agreement for the old equipment.
The Pele-phone board of directors confirmed on Thursday the purchase of $263 million worth of equipment for the new CDMA digital system from Motorola. Motorola’s original price was $293 million. The board also approved Motorola’s proposal to pay the company $55 million in exchange for the cancellation of the buy back agreement.
The ownership agreement between Motorola and Bezeq provides that Bezeq will forego 3 years of royalties from Pele-phone, and, in exchange, Motorola undertook to buy back the analog infrastructure equipment for 75% of its value less 10 years’ depreciation. This was to happen in the event of Pele-phone buying CDMA equipment from Motorola.
As an alternative, Motorola has now offered to redeem the agreement for $55 million, which it will discount from the price of the equipment. The board approved this proposal, and approved a payment of $19 million to Bezeq, in exchange for its waiving of 3 years’ royalties, since the buy back agreement, as laid down in the ownership agreement, was not fulfilled.
The Pele-phone board's decision still needs to be ratified by the board of Bezeq, which is to meet on September 16.