Fiber-optic venture Unlimited is beginning preparations for raising hundreds of millions of shekels in debt to finance continuation of its deployment. The issue will probably take place towards the end of the year, but the thoughts and plans are becoming concrete, in view of the delay in the transfer of a second NIS 75 million state grant, among other things.
The Giza Singer Even economic consulting firm is handling the debt issue. The issue is part of the venture's business plan, which requires very large investments in order to deploy its infrastructure, but it appears that the main problem is not the work itself, which is also subject to delays, but the fact that the target market is paying more attention at the moment to ventures in the wholesale market by the existing operators.
If the small numbers of those signing up for Unlimited's services is also taken into account, the company is liable to encounter a problem with working capital if it does not succeed in recruiting more subscribers.
Up until now, the venture has been financed by its shareholders, suppliers' credit from Cisco Systems, and a NIS 75 million state grant. More money is apparently needed now to continue the work, and the company hopes to raise it from the banks or financial institutions.
Capital market sources that havetalked with the company say that Unlimited reported that its deployment included 10,000 homes so far, but declined to state how many subscribers had actually been connected. Some investment managers expressed surprise at the slow pace of deployment, while hearing figures from Internet providers indicating that the number of subscribers actually hooked up to Unlimited's services was very low.
The general impression obtained by investors is that the venture is not as successful as expected, and does not yet pose a competitive threat in the telecommunications market. Sources close to the company, on the other hand, assert that there is no plan to raise debt at present. The big question is whether the banks will agree to lend money to a venture making no substantial progress in marketing, when the state itself is disappointed with how it is being run.
Published by Globes [online], Israel business news - www.globes-online.com - on July 6, 2015
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