Pelephone Communications Ltd. has reopened its 4G equipment tender, won by Ericsson AB (NYSE; OMX: ERIC), after rivals lowered prices
A 4G network comprises switches, which are the core, and radio antennas. The radio section is the largest part of the tender because of constantly growing use. Networks are rarely replaced, but Pelephone is now considering a replacement because of the low bids. It is possible to estimate that the first stage of the tender is now less than $70 million.
Two weeks ago, Pelephone CEO Gil Sharon held what were supposed to be the final meetings with the bidders, before deciding on the winner in the tender. The first meeting was with Ericsson, which matched the bids by Alcatel Lucent and Nokia Siemens Networks. Pelephone told Ericsson that it won the tender and the parties shook hands.
In subsequent meetings, Sharon told representatives of Nokia Siemens and Alcatel Lucent that Ericsson won the tender. Alcatel Lucent countered with a new offer, and Pelephone, realizing that the last word had not yet been said, decided to continue the pricing, even though Ericsson thought it had won the tender.
The question now is whether Pelephone will decide to replace the switches with Ericsson as the supplier, and to work with two vendors for the antennas. Pelephone says that everything is open as far as it is concerned, and, though unlikely, there may be competition for the switches.
In the tender, Pelephone has been able to get lower prices than it ever imagined possible, and the pricing is not yet over, even for the switches.
Published by Globes [online], Israel business news - www.globes-online.com - on March 26, 2014
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