Gilat Sees First Positive Net Income in Two Years

Gilat Sees First Positive Net Income in Two YearsBuoyed by projects gaining traction in Latin America, Gilat Satellite Networks reported third quarter revenues of $57.1 million, up from $54.1 million during the previous quarter and up $51.8 million during the same period in 2013. Two major projects, specifically Colombia’s Ministry of Information Technologies and Communications (MINTIC) Kioscos Vive Digital project and Peru’s Integración Amazónica Loreto (IAL) project, were signed in 2013, but did not start contributing significant revenues until recently.

“This is the first time in two years we have a positive net income, Erez Antebi, CEO of Gilat, said on the company’s third quarter earnings call.

For Colombia’s Kioscos Vive Digital, Gilat is involved in a 10-month deployment of broadband and telephony for more than 1,9000 kiosks in rural parts of the country. MINTIC is endeavoring to place kiosks in population centers of more than 100 to provide community Internet access. Gilat’s deployment is followed by three years of educational training services. Antebi said the company anticipates revenues growing further from this project as more sites are deployed this year.

Gilat expects to complete the majority of its responsibilities for Fitel’s IAL initiative in Peru by the end of this year. Antebi said most of the contract was for design, setup and implementation of the network, with the remainder allocated for operations and maintenance for a period of 10 years. Once complete, 70 communities in the Loreto region, a remote area along the Amazon River, will have access to broadband and telephony services.

Antebi attributed Gilat’s improved results to its services division and defense and mobility division, along with the fruition of 2013 cost-reduction measures. The company is seeing defense growth in Asia and Latin America, especially for manpacks and connecting unmanned platforms. Antebi said the company received a contract from a country in Latin America to install a ground station to connect Unmanned Aerial Vehicles (UAVs) for a national intelligence agency. In the U.S., the company is working with Exelis on new antennas, having already delivered an X- and Ka-band version. A Ku-band variant is expected shortly.

Gilat won other Latin American contracts recently as well. Antebi said the company received an order from OpenSky for a VSAT network for Uruguay’s state-owned telecommunications provider Antel. The project would bring Internet access to enterprise, education and defense customers. Another was from Vietnamese mobile network operator Viettel Group for a hub in 59 remote sites for 3G backhauling in Peru. Other notable awards included a SkyEdge 2-c order from Telstra for Australia, another for a VSAT network in Russia and a CellEdge agreement in Benin in Africa.

Going forward, Antebi said the aeronautical market is an area that will see increased focus.

“For Gilat, airborne is a rapidly growing segment where we already provide [Block UpConverters] BUCs to our partners AeroSat and Tecom. We plan to further increase our presence in that segment by adapting our antenna technology to the airborne market,” he said. “Because our antennas are based on plastic instead of aluminum, we believe the benefits of reduced weight and cost will be particularly attractive to potential customers.”

Antebi also outlined another potentially lucrative project in Peru.

“The Peruvian government recently issued four bids for combined wireless and fiber optic networks. The terms of these deals are not yet finalized, however, we expect that each region may be worth between $80 and $150 million. Depending on the terms of these bids, we may submit our proposals for one or more of them in the coming months,” he added.

Gilat expects its fourth quarter of 2014 to continue with the third quarter’s momentum, with higher profitability.

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