Israel's GVT to Set Up $80 Mln Telephony Network in Colombia

$550 million will be invested in the Brazilian communications network.

At the end of last week, GVT won a tender for setting up a telephony network in Colombia at $80 million. The company pledged to cover 7,500 communities across the country, and operate the network for 10 years. The deployment of the network will take 18 months.

In 50% of these communities, GVT will use VSAT satellite technology developed by Gilat Satellite Networks, which holds 5% of GVT. In other communities, GVT will use cellular or wireless technologies. Gilat cooperated with GVT in the tender.

Nine companies, including Telecom Colombia and US company Hughes, bid in the tender for covering 6,500 points. GVT submitted a $50 million bid (the subsidy paid by the Colombian government for the establishment of the network, plus the operation concession).

The government's budget for the project is $80 million, and, according to the terms of the tender, the winner gets another 650 points. In addition, the tender committee decided to give more points to the winner, in order to spend the entire budget earmarked for the project, and the contract grew to 7,500 points, for $80 million.

A month ago, GVT won the Brazilian government's tender for the second operator for inland communications in nine south Brazilian states housing 40 million inhabitants. The consortium, in which GVT holds 78%, will pay about 100,000 reals to the Brazilian government for the concession.

GVT's consortium in Brazil includes US company Comtech (20%), and communications company RSL COM, which is controlled by Ronald Lauder. Investment in setting up the network is estimated at $50 million. GVT is controlled by the Magnum group, which is represented in Israel by company chairman and general manager Shaul Shani, and which holds 55% of the company. US investment bank Merrill Lynch shareholders own 20%, Clal Information Technologies - 10%, Discount Investments and PEC - 10%, and Gilat Satellite Networks - 5%.

Published by Israel's Business Arena September 26, 1999

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