Valley Telecom’s Jorge Pinievsky tells “Globes” about his plans to make Alvarion into a major communications solutions player.
Jorge Pinievsky / Tamar Matzafi
/ By Shiri Habib-Valdhorn/
On the eve of Rosh Hashana, Alvarion Ltd. (Nasdaq: ALVR; TASE: ALVR) embarked on a new road, after the court approved its sale to Valley Telecom Ltd. for NIS 38 million ($10 million) . The company, battered by years of layoffs and failed attempts at recovery, ended up in receivership during the summer. Nonetheless, it was a hot item that Valley Telecom and Sigma Wave Ltd. competed to buy. Valley Telecom won the tender and took control of the company a few days ago.
Jorge Pinievsky, the founder and COO of telecommunications equipment vendor Mobile Tornado Group plc (LSE: MBT), is behind Valley Telecom. His partner in the investment is one of Britain’s wealthiest men, Peter Wilkinson, who is also the non-executive chairman of Mobile Tornado. Israeli businessman Peled Hadar also has an option to acquire a stake in Valley Telecom, while the owner of an online Palestinian company, Hani Al-Alami, who had been mentioned as a partner, remains only a customer for now, and is not part of the controlling core.
“Globes”: When you obtained Alvarion, did you get what you expected, or were there surprises?
Pinievsky: “The truth is that everything was OK. We know that we’re going to work hard, but we’re used to that.”
– When did you first show an interest in Alvarion?
“Two and a half years ago, but it was very big then, and ignored us.”
Alvarion was created in 2000 by the merger of BreezeCOM and Floware. At its peak, it had 1, 100 employees and a market cap of $1 billion. It was the WiMAX market leader, but the technology never achieved its hoped-for breakthrough, and the company had to adapt to the new market conditions.
“The problem was that Alvarion was a company without an owner, but many shareholders scattered among different entities, ” says Pinievsky. “A lot of mistakes were made, beginning with the huge number of employees, many subsidiaries, wrong sales, and products lines that were not established and which we will add.” He adds that Alvarion is seeking an experienced CEO to take the company forward. Pinievsky will apparently serve as chairman.
– What will you do differently at Alvarion, compared with the past?
“The big change will be to turn the company from a seller of ‘boxes’ into a seller of solutions and projects. Alvarion used to sell equipment to companies that carried out projects. For example, if a municipality wanted to establish a safe city (a municipal surveillance system – S.H.V.), it bought the cameras from one company and the WiMAX or Wi-Fi antennas from Alvarion, but the company that made the big money was the service provider. We do not intend to sever ties with our good existing partners, but to add another layer of service.
“We will invest in infrastructures so that we can benefit from repeat revenue, charge use fees, and know what next month’s income will be. Once, someone else benefited from the upside; now Alvarion will also take care of itself.”
Alvarion used to focus on the telecommunications vendors market, and later on government and enterprise customers. What will you focus on now?
“There will be several combinations. Anyone who consumes Internet outside needs our products, and today everyone walks around with devices that connect to the Internet. With carriers, will operate in the niche offload market (easing online congestion – S.H.V.). In addition, our products work across all walks of life, such as education. If a country wants to promise a computer for every teacher, this also means Internet access. There are also the homeland security, healthcare, and safe city sectors. Alvarion’s current products offer good solutions to all of these.”
Pinievsky is not satisfied with what exists now, and promises to enter new fields that use LTE technologies. “We’re not stopping here. We want Alvarion to be a real player that offers end-to-end communications solutions, ” he says.
The price for acquiring Alvarion from its receiver started out far lower than the final price, but the bidding in the tender between Valley Telecom and Sigma Wave boosted it. In the final court hearing, the receiver, Yoav Kfir, began by recommending Sigma Wave’s offer, after an 11-hour auction. But Valley Telecom improved its bid when the hearing opened, despite Sigma Wave’s objections. Support for Valley Telecom from Alvarion’s employees and secured creditor caused Kfir to change his mind, and Valley Telecom won the tender.
– How did you persuade Alvarion’s employees to support you?
“I believed that Sigma Wave was seeking a platform for a reverse merger for SuperCom Inc. (Nasdaq: SPCB), which it controls, but there is no synergy with its products. I praise them; they do great things at SuperCom, but we’re in the communications market. We have homeland security projects on five continents, and we work with tier-1 carriers. The employees have invested a great deal of time, and we wanted to show a real future for the company.”
While in receivership, Alvarion had 55 employees, 48 of whom Valley Telecom has promised to employ under their job terms before the receivership. “The employees are very loyal and committed to the company, ” says Pinievsky.
– Are Alvarion’s customers afraid to work with the company?
“I don’t think so. People love Alvarion’s products. We’re in contact with several customers, and they can’t wait to see the light at the end of the tunnel. Until now, we’ve shown steadfastness, and I don’t think that there will be reasons for the customers to fear.”
– Are there plans to merge Alvarion with Mobile Tornado, which is now a kind of sister company?
“There are no such plans. However, Mobile Tornado could be a great way to market for Alvarion, and it can promote Alvarion’s products in its projects.”
Alvarion’s next step is to reach a debt settlement, which Kfir will submit to the court. As part of the process, he is appealing Nasdaq’s decision to delist the company. Pinievsky is not a party in the decisions on a debt settlement or listing, but he hopes that they will be favorable.
– How do you see Alvarion’s future?
“I cannot offer forecasts, because Alvarion is a public company, but we’re investing heavily so that it will be successful and profitable. It would not be serious to give numbers now; we first have to restore Alvarion to health. It is important for the company to show stability and continuity, and if we don’t rest on the laurels of its current products, and strive for more, then we’ll say that we succeeded. We haven’t come to save Alvarion, but to build something big from it. But let us not get boastful: the first goal is to get back on track.
Published by www.globes-online.com
See all stories about Alvarion:
- SuperCom Returns To Nasdaq
- Valley Telecom To Pay NIS 38 Million ($10.4 Million) For Alvarion
- SuperCom Buys Back SmartID Division From OTI
- Supercom Eyes Alvarion Acquisition
- Alvarion Receives Delisting Notification From NASDAQ
- Alvarion : From 1 Billion Market Cap To Receivership
- Alvarion Raises $3m From Israeli Private Investors