The board of directors of HOT Telecommunication Systems Ltd. (TASE: HOT) today approved the acquisition of its sister company, mobile carrier Mirs Communications Ltd., for NIS 1.3 billion, net of Mirs's debts, which totaled NIS 257 million at the end of March. HOT also announced that it will procure NIS 550 million of optical equipment to upgrade Mirs' network by the end of 2014.
Patrick Drahi controls both companies through Cool Holdings Ltd. Mirs will become a fully-owned subsidiary of HOT when the deal is closed. HOT will seek bank loans to finance the acquisition, and it will a detailed report on the deal within 14 days.
The acquisition consolidates Drahi's plan to create Israel's largest full-service telecommunications company. Cool Holdings acquired Mirs for $170 million from Motorola Israel Ltd. in December 2009, six months after acquiring his initial stake in HOT.
In April, Mirs won the Ministry of Communications tender to set up one of two new UMTS mobile carriers, with a bid of NIS 705 million. This win boosted Mirs's value for the present deal, which could not have been possible had Drahi not acquired most of his partners' stakes in HOT, giving him control of the company.
HOT provides cable TV, telephony, and Internet access solutions. The acquisition of Mirs will enable to provide mobile telephone services as well.
HOT will provide infrastructure services to Mirs's 550 mobile antennas to its communications centers via its cable network by the end of 2014. HOT estimates contract's value at NIS 150-250 million, depending on each site's technical requirements and necessary bandwidth.
HOT's share price rose 1.3% in morning trading to NIS 61.20, giving a market cap of NIS 4.7 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on July 20, 2011
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