Montreal-based Mitec Telecom Inc. and Israeli wireless provider Optiway Inc. have signed a letter of intent for a combination between the two companies. The proposed combination will be subject to a number of conditions to be set out in a definitive agreement as well as shareholder approvals and regulatory approvals from relevant authorities in Canada and Israel.
Optiway, founded in 2004, offers the most advanced optical fiber solutions that enable wireless communication to take place within In-Building Wireless (“IBW”) environments such as office towers, universities, hospitals, business campuses, parking garages, stadiums and tunnels. Such indoor locations pose unique challenges due to multiple interference factors that affect indoor coverage and reception quality including steel and concrete that weaken cellular signals and impede indoor signal strength. Optiway’s elegant and cost-effective solutions deliver the high capacity required to support large cellular subscriber volumes, while eliminating interference, crosstalk and cable radiation.
Optiway’s patented active Distributed Antenna System (“DAS”) technology offers unique cost and performance advantages as compared to other competitive products including:
- a much smaller and more compact casing (an important factor in indoor environments where space is at a premium),
- sophisticated software that allows the system to be accessed, monitored and managed remotely over the Internet,
- the ability to handle multiple cellular operators, wireless standards and frequencies on the same single-fiber platform which allow competing cellular operators in the same market to share hardware, cable and fibre optic, significantly reducing costs of facilitating in-building wireless coverage,
- an open-platform technology enabling mobile service providers to upgrade mobile technologies without re-investing
The active DAS market is $2.5 billion annually today and is expected to grow to $10 billion annually by 2015. As the majority of wireless communication occurs indoors via a variety of wireless and smart phone devices whose use has grown at a phenomenal rate and outpaced predicted demand worldwide, mobile operators must reinforce their existing outdoor coverage with effective IBW networks to support their growing broadband customer base.
Based in Israel, long-considered one of the world’s most respected hotspots for next generation technology, Optiway has achieved significant domestic market share demonstrating the efficacy of its technology. In 2011, Optiway began significant deployments in South America and Eastern Europe with initial sales to leading telecom operators in Chile, Colombia, Mexico, Russia, the Ukraine and India. Its strategy for 2012 is to introduce its technology to the North American and other strategic markets, in addition to working with its existing client base and continue to enhance its product portfolio.
“The combination of Mitec, a TSX listed company with Optiway, a privately held Israeli company, has the potential to result in a successful global company with strong patented intellectual property, engineering capability, sales and marketing reach and capital market experience. Mitec is looking for proprietary growth opportunities in order to exploit its infrastructure and background knowledge in wireless technology. Optiway has developed a game changing wireless technology in an area which will appeal to telecom operators worldwide. I am delighted that Mitec has identified a transformational, impact deal that fits both companies’ objectives. The ability to provide Optiway with a cash infusion and public company exposure is very compelling to them. Upon closing of the transaction, Mitec shareholders will have the ability to participate in the success of a hot proprietary technology, as the wireless revolution continues to expand around the globe”, said Jeffrey Mandel, President and CEO of Mitec.
Upon closing Mitec shareholders are expected to own between 30% and 40% of the combined company which will be comprised of Optiway’s proprietary in-building wireless technology, among its other assets. Mitec will provide between $3.5 million and $5 million cash at closing, which will determine the exact percentage ownership allocated to Mitec shareholders.
With respects to other matters, Mitec expects the closing relating to the previously announced letter of intent to acquire certain assets representing Mitec’s VSAT division from a group of Mitec senior employees will occur prior to the closing of the proposed transaction between Mitec and Optiway. Mitec previously announced that the initial closing for the proposed VSAT transaction would have taken place on or about December 15, 2011.