Fiber optic tender award to Cisco delayed
Prime Minister Benjamin Netanyahu will not be able to personally award Cisco chairman John Chambers the tender win next week, as hoped.
An attempt to award Cisco Systems Inc. (Nasdaq: CSCO) chairman John Chambers the win in Israel Electric Corporation’s (IEC) (TASE: ELEC.B22) fiber optic venture next week, will probably not happen, because the tenders committee has not completed its work. Chambers will visit Israel next week to attend President Shimon Peres’s President’s Conference, and is scheduled to meet Prime Minister Benjamin Netanyahu. The plan was to use the opportunity for Netanyahu to award Chambers the tender win.
Cisco is the main financial backer and dominant partner in the fiber optic venture with Sweden’s ViaEuropa AB. Cisco considers the venture as an extraordinary opportunity to promote investments in fiber optics to replace current copper-based networks, used by Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ), and coaxial cable networks, 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 optics 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, such as Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR). The 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. The new deadline for announcing the consortium as the tender winner would therefore be delayed until early July.
Under the timetable, immediately after the ViaEuropa consortium is declared the tender’s winner, it will provide financial guarantees before the deal will be closed, and the joint company that will be founded will be able to obtain a license from the Ministry of Communications.
Published by Globes [online], Israel business news – www.globes-online.com – on June 13, 2013