Nortel Networks, the Canadian telephony major, has launched Nortel Networks Israel (sales and marketing) Ltd., a joint venture with the Israeli conglomerate, Koor Industries, and involving Koor’s Telrad subsidiary. Nortel, which has had a 20-year relationship with Telrad, says the new company will deliver high-performance Internet solutions to carrier and enterprise customers in Israel.
The new company will expand Nortel Networks' product offerings, which currently includes optical Internet, wireless Internet, Internet telephony and e-business solutions, to include the distribution of networking equipment in Israel and certain unspecified markets, a Nortel release disclosed.
Nortel Networks Israel, which is 72 percent owned by Nortel Networks, includes the former sales, marketing and support businesses of Telrad. It also encompasses Telrad's business in additional markets outside of Israel, including South America and Africa. Nortel Networks Israel expects to employ up to 400 workers in sales, marketing, service and technical people in its first quarter of operation.
The deal to create Nortel Networks Israel was originally formalized in April, and included a $140 million asset transfer. As part of the deal, Koor Industries acquired Nortel Networks' 20 percent stake in Telrad Networks for $45 million. Nortel Networks acquired Telrad's business outside Israel in several markets for an estimated $95 million.
"We're investing heavily and leveraging the global resources of Nortel Networks to bring a new, high-performance Internet to Israel," remarked Darryl Edwards, CEO, Nortel Networks Israel. "Establishing a fully operational headquarters in Israel enables us to invest more in our existing customers, and to develop relationships with new players in this dynamic market."
"This is an exciting investment for us," said Amiram Fleisher, a Koor Industries spokesperson. "It further strengthens our position as a telecommunications holding company, but more importantly allows the new company to deliver state-of-the-art solutions to the deregulated market at a time when both businesses and consumers are investing to realize the Internet's huge potential benefits."
"This venture will allow Nortel Networks to quickly take a leadership role in a dynamic region where Internet usage has doubled every year since 1994," said Matt Desch, president of Nortel Networks Service Provider Solutions, Europe, Middle East, and Africa. "Our product solutions and global marketing strategy, combined with the local reputation of Koor Industries and expertise of Telrad Networks, will uniquely position us to serve this soon to be deregulated market."
According to the Israeli ministry of communications, demand for cutting-edge, high-performance Internet solutions is expected to grow rapidly in Israel, as a result of a forecast 30-50 percent growth in the local access market over the next five years.
High levels of Internet and cellular use, coupled with an abundance of high-quality technical expertise, make Israel a strong market opportunity. The Meimad Institute estimates that 29 percent of Israel's households are currently wired to the Internet.
Salomon Smith Barney forecasts that the nation's cellular market, which already boasts a greater penetration rate than the European average, will increase by 15 percent annually through 2005.
In the Middle East, Israel constitutes nearly 60 percent of all Internet traffic. Iran is the second largest Internet user.
Nortel Networks is a global leader in telephony, data, wireless, and wire-line solutions for the Internet. The company employs 70,000 workers worldwide. Its 1999 revenues stood at $21.3 billion.
Koor Industries (KOR) is an investment holding company headquartered in Tel-Aviv. Before the Nortel deal, its primary assets include telecommunications and electronics companies such as Tadiran, Telrad, and ECI Telecom.
Telrad Networks is the leading vendor and telecom solutions provider in Israel, serving as the main supplier of network equipment to Bezeq — the Israel Telecommunication Corp., Bezeq International, Barak International and Golden Lines International. — (Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)
