Sources inform “Globes” that, today, Nortel won the tender held by Partner Communications (Nasdaq: PTNR) for setting up its third generation wireless network. The contract is worth some $175 million.
Other participants in the tender included Ericsson, Nokia, and a joint bid from Siemens and NEC.
After prolonged wavering, Partner’s management recently decided to deploy the third generation network using UMTS technology by the end of the year, and to start providing commercial services in 2004. It is believed that deployment will initially be in the central area of the country only.
Partner estimates the cost of setting up the network at $300 million. Half this sum will be invested in the first year of the project, which means that part of the investment will be reflected in financial statements for 2003, and part in the 2004 statements.
Despite the heavy investment involved in establishing the network, Partner’s management has given assurances that the company has the wherewithal to finance a third generation UMTS network, and that it has no need to raise capital for this purpose.
Wireless giant Hutchison Whampoa, which owns 42.7% of Partner, wants to see it make progress with its third generation network in Israel, and will support it by providing access to know-how and applications. Hutchison will also help Partner buy equipment at cheap prices. It is still unclear how successful Hutchison has been with its new network, marketed under the brand name “3”. The subscription rate has been fairly slow.
Several analysts estimate that, in the short term, the cost of deploying the new network will hit Partner’s cash flow, creating pressure on its finances just when it is likely to need every shekel to reduce its threatening leverage.
Partner said in response that “the company is in the process of selecting a provider for the infrastructure equipment for the third generation network that it will deploy. Four providers are taking part in the process, and after it is completed, the company will notify the winner.”
Published by Globes [online] - www.globes.co.il - on July 31, 2003