FSM Ground Services, which operates the Tel-O-Fun bicycle renting system in Tel Aviv, has won a build, operate, transfer (BOT) tender to construct, operate, and maintain an automated system for renting bicycles in central Jerusalem. The tenders committee of Eden the Jerusalem Center Development Company selected FSM's bid.
The bicycle rental system will continue 50 parking stations and 500 ordinary (non-electric) bicycles deployed in central Jerusalem and tourist areas. FSM estimates that construction will take a year, after which FSM will operate the system for 10 years with a five-year extension option.
FSM's shareholders are Fridenson (TASE: FRDN) (45%), Eitan Shamir (45%), and former FSM CEO Danny Spielman (10%). The company believes that its revenue from building the system will total NIS 13 million.
FSM currently operates the Tel-O-Fun service that offers 2,000 bicycles in Tel Aviv, Givatayim, Ramat Gan, and Bat Yam. Subscribers for this service totaled 6,653 at the end of 2017, 23% fewer than at the end of 2016. Revenue from operating the system remained stable at NIS 15 million in 2017, but the company lost NIS 1.8 million, compared with a NIS 400,000 profit in 2016.
FSM's revenue in the first half of 2018 totaled NIS 9.2 million, 21% less than in the corresponding period last year, and its operating loss grew from NIS 238,000 in the first half of 2017 to NIS 875,000 in the first half of 2018.
The number of Tel-O-Fun subscribers began falling even before the arrival of important competitors, such as Mobike, whose silver-and-orange bicycles have been filling the streets of Tel Aviv and Ramat Gan in recent months. Unlike Tel-O-Fun, Mobike's bicycles do not have to be parked at specific stations; they are spread throughout public spaces.
In the coming months, Mobike will launch a mobile venture in additional local authorities outside the Greater Tel Aviv municipal region. The company has imported 2,500 bicycles so far, and expects thousands of its bicycles to be spread over urban areas all over Israel within a year.
Electric scooter sharing company Bird also began operations in Israel in the past month, and its scooters are also flooding the streets of Tel Aviv. Bird will be followed soon by its US competitor, Lime, which will also offer shared e-scooters.
Published by Globes [online], Israel business news - www.globes-online.com - on October 3, 2018
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