Gilat Awarded $17 Million by Pronatel for Expansion of Regional Telecommunications Project in Peru
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Insights
The $17 million contract awarded to Gilat Satellite Networks by Pronatel for the expansion of telecommunications services in the Amazonas region of Peru represents a strategic move that could have significant implications for the company's revenue streams and market positioning. The extension of the original 2018 agreement to include 35 additional localities and various public institutions may bolster Gilat's presence in emerging markets, where demand for internet connectivity is rapidly growing.
From an industry perspective, this expansion is aligned with the global trend of increasing internet penetration in rural and underserved areas. The focus on educational and health institutions suggests an emphasis on social impact, which could enhance Gilat's corporate reputation and potentially lead to further government or public sector contracts. It is also indicative of the broader industry's shift towards Corporate Social Responsibility (CSR) and the role of connectivity in achieving it.
Moreover, the long-term nature of this contract, spanning a decade, provides Gilat with a stable revenue outlook and may improve investor confidence in the company's sustainability and growth potential. This is particularly relevant in the satellite networking sector, where long-term contracts are crucial due to the high initial capital expenditure and the need for consistent revenue to offset these costs.
Investors should note the financial significance of Gilat's contract with Pronatel, as $17 million can be a substantial addition to the company's order book, depending on its overall revenue size. This contract could improve Gilat's financial health by providing a predictable cash flow over the next 10 years, which is particularly valuable in the capital-intensive satellite networking industry.
It is also important to consider the operational leverage this deal might provide. The infrastructure for the Amazonas region is nearly complete, suggesting that the marginal cost of expanding services could be lower than the initial setup costs, potentially leading to higher profit margins on the incremental services provided under the new contract.
However, investors should also be aware of the risks associated with such projects, including potential regulatory changes, technological shifts and execution risks. These factors could affect the profitability and viability of the contract over its duration. Moreover, the specific terms of the contract, such as payment milestones and penalties for delays or performance issues, would be critical in assessing the financial impact of the deal on Gilat.
The contract's focus on enhancing connectivity in rural areas by establishing free Wi-Fi hotspots and a community tele-center is a notable development in the context of the digital divide. This initiative reflects a growing market trend where connectivity is seen as a fundamental service, akin to utilities like water and electricity. The societal benefits, such as improved telehealth and tele-education services, could lead to increased demand for Gilat's services in other similar regions globally.
Understanding the local market dynamics, such as the population's digital literacy levels and the existing infrastructure, is crucial in evaluating the potential success of such projects. The adoption rate of the services provided will be a key metric to monitor, as it will influence the project's long-term viability and the company's opportunity to expand its services further.
Additionally, this project could serve as a case study for Gilat in demonstrating its capabilities to other governments and organizations looking to implement similar connectivity solutions, thus potentially opening up new markets and customer segments for the company.
Network expansion and 10 years of services to address the growing needs for internet in additional parts of the Amazonas region
PETAH TIKVA, Israel, Jan. 16, 2024 (GLOBE NEWSWIRE) -- Gilat Satellite Networks Ltd. (Nasdaq: GILT, TASE: GILT), a worldwide leader in satellite networking technology, solutions, and services, announced today that the company was awarded a
Through this new activity, Pronatel (Programa Nacional de Telecomunicaciones) is expanding the original 2018 agreement with Gilat. In coordination with the Amazonas regional government, Pronatel is expanding the project to include connectivity to 35 new localities and dozens of new public institutions, including schools and health posts, within the Amazonas region of the country. Additionally, Gilat will implement several free Wi-Fi hotspots and a community tele-center that includes computers, printers, and internet services for a period of 10 years.
“Through this expansion to the Broadband Project for the Amazonas region, 37 additional schools and 6 additional health posts will now have internet access to promote telehealth, tele-education, and the utilization of technological tools among the citizens,” said Sarita Vílchez Castellanos, executive director of the Pronatel National Telecommunications Program. “Citizens will also benefit from a new digital access center and additional public squares with free Wi-Fi, further promoting inclusion and digital literacy among citizens in rural areas.”
“Now that the necessary infrastructure for the Amazonas region is nearly completed, this expansion with Pronatel will serve the people of the region well as we move into the operational phase of the project in earnest,” said Arieh Rohrstock, General Manager Gilat Peru and Gilat’s Corporate SVP. “Working together with Pronatel and the regional government, we’re proud to provide people more access to resources and information, bridging the digital divide and fulfilling the right of all people to be connected.”
About Gilat
Gilat Satellite Networks Ltd. (NASDAQ: GILT, TASE: GILT) is a leading global provider of satellite-based broadband communications. With over 35 years of experience, we create and deliver deep technology solutions for satellite, ground and new space connectivity and provide comprehensive, secure end-to-end solutions and services for mission-critical operations, powered by our innovative technology. We believe in the right of all people to be connected and are united in our resolution to provide communication solutions to all reaches of the world.
Our portfolio includes a diverse offering to deliver high value solutions for multiple orbit constellations with very high throughput satellites (VHTS) and software defined satellites (SDS). Our offering is comprised of a cloud-based platform and high-performance satellite terminals; high performance Satellite On-the-Move (SOTM) antennas; highly efficient, high-power Solid State Power Amplifiers (SSPA) and Block Upconverters (BUC) and includes integrated ground systems for commercial and defense, field services, network management software, and cybersecurity services.
Gilat’s comprehensive offering supports multiple applications with a full portfolio of products and tailored solutions to address key applications including broadband access, mobility, cellular backhaul, enterprise, defense, aerospace, broadcast, government, and critical infrastructure clients all while meeting the most stringent service level requirements. For more information, please visit: www.gilat.com
Certain statements made herein that are not historical are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. The words “estimate”, “project”, “intend”, “expect”, “believe” and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties. Many factors could cause the actual results, performance or achievements of Gilat to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, inability to maintain market acceptance to Gilat’s products, inability to timely develop and introduce new technologies, products and applications, rapid changes in the market for Gilat’s products, loss of market share and pressure on prices resulting from competition, introduction of competing products by other companies, inability to manage growth and expansion, loss of key OEM partners, inability to attract and retain qualified personnel, inability to protect the Company’s proprietary technology and risks associated with Gilat’s international operations and its location in Israel, including those related to the current terrorist attacks by Hamas, and the war and hostilities between Israel and Hamas and Israel and Hezbollah. For additional information regarding these and other risks and uncertainties associated with Gilat’s business, reference is made to Gilat’s reports filed from time to time with the Securities and Exchange Commission. We undertake no obligation to update or revise any forward-looking statements for any reason.
Contact:
Gilat Satellite Networks
Hagay Katz, Chief Products and Marketing Officer
hagayk@gilat.com
EK Global IR
Ehud Helft, Managing Partner
ehud@ekgir.com
FAQ
What is the contract amount for the expansion project in Peru?
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What are the main objectives of the expansion project in Peru?
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