Gilat Satellite Networks Ltd. (Nasdaq: GILT; TASE: GILT) today reported that its satellite platform had been selected by NBN and Speedcast to provide services to businesses and government customers throughout Australia. The deal is worth tens of millions of dollars spread over a number of years.
Gilat Satellite manufactures communications equipment, and focuses on satellite technologies. NBN is an Australian government company created to provide broadband access in remote areas in the country through the use of its two satellites. The company published two tenders: one for the consumer market, in which VisSat won, and the other for the enterprise market, won by Speedcast, which Gilat Satellite joined as a ground equipment supplier.
"Beyond the numbers themselves, it is important to stress that the deal is important to us because it is at the intersections of several of our emphases: continued development and strengthening of Gilat Satellite's usual business and going to places with high average revenue per user (ARPU), and which are familiar with and willing to pay for better technology, and where they pay on time the way they should. This deal is exactly on these two vectors, and will help us," says Gilat Satellite CEO Yona Ovadia.
"Globes": Are the profit margins in this deal higher than in Gilat's other deals?
Ovadia: "This deal is profitable, and it is in the area of the world in which we're more optimistic about profits, in contrast to the more challenging situation in Latin America and Southeast Asia." Ovadia adds, "We are glad and proud that our technology was selected, and this is because it is translated into a quicker return on investment."
Gilat Satellite VP commercial Michal Aharonov notes that the Australian plan is designed to connect businesses and government offices to broadband, and that Gilat Satellite supplies the hub ground equipment and VSATs (terminals).
"Our technology is cloud-based and decentralized, so it makes it possible to centrally manage a larger quantity of beams with a number of different applications, so that the satellite owner can later expand services to customers," Aharonov explains. "The advantage of our technology is higher utilization - service to more customers with the same capacity, or higher capacity per customer. This generates more money from the satellite, and was a material factor in the decision to go with Gilat."
Gilat Satellite's share price has climbed 35.4% over the past year, driving the company's market cap up to $446 million. Gilat Satellite's largest shareholder is FIMI Opportunity Funds, led by Ishay Davidi, with a 34.3% stake. Gilat Satellite will publish its 2017 financial results next week. The company is projected to finish the year with $280-290 million in revenue and $24-26 million in EBITDA.
Published by Globes [online], Israel Business News - www.globes-online.com - on February 5, 2018
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