The fact that Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) does not work with Cisco as a communications provider for its core network is giving Cisco Israel second thoughts about the economic viability of its continued support for the Unlimited fiber-optic venture. Sources at Unlimited say that reports have increased in recent months that Cisco Israel has already had enough of the Unlimited fiber-optic venture, which is now getting its support from Cisco Europe, whose consultant is regularly advising the company.
Sources well-informed about Unlimited say that in recent months, senior executives at Cisco Israel have said that the chances of rescuing the venture are very poor, given the state it has reached. They added that Cisco Israel has already completed very fine sales for the venture as part of the financing agreement, so there is no real reason to remain in it and continue to support it, especially when Cisco Israel is being excluded from the tender for Bezeq's core network.
Bezeq says that the connection with Cisco is continuing, and the company is buying equipment from Cisco, mainly for business sector customers, and there is no official decision against cooperation with Cisco because of its involvement in the fiber-optic venture. At the same time, information obtained by "Globes" indicates that there may be no such official decision, but Bezeq is capable of implementing such decisions in practice without leave footprints. The same information emphasizes that a decision to exclude Cisco Israel was indeed taken.
Cisco Israel was the pipeline through which Cisco's communications solutions were sold to the venture in exchange for financing provided to it. Criticism of Cisco by some of the shareholders bordered on very serious accusations, due to the price charged for the equipment and the enormous quantities of purchases made without any justification.
Cisco was and still is the most important partners in the venture, although it operated in cooperation with Swedish controlling shareholder Jonas Birgersson, owner of Via Europa.
There have been acrimonious disputes in recent months between the shareholders in the venture, with an effort being made to introduce a new controlling shareholder who will take the reins in an attempt to save the venture, which is on the verge of collapse. Israel Electric Corporation (IEC) (TASE: ELEC.B22) chairman Yiftah Ron-Tal stated explicitly that if no investor is found soon for the venture, he will close it down. The completion of arrangements between all the shareholders is now being awaited, so that an information room can be opened for recruiting external investors as controlling shareholders in the company. The amount of investment needed from a new controlling shareholder is estimated in the hundreds of millions of shekels.
Published by Globes [online], Israel business news - www.globes-online.com - on August 21, 2016
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