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WiMAX Telecom to Invest $85M

Austrian service provider startup WiMAX Telecom GmbH aims to invest €70 million ($85 million) on a fixed wireless 802.16 network based on equipment from Alvarion Ltd. (Nasdaq: ALVR).

In January, WiMAX Telecom announced it had paid €160,000 ($194,000) for a nationwide 3.5GHz license in Austria (see WiMax Telecom Acquires Spectrum and WiMax Telecom Eyes Standards). In a statement this week, the company talked up plans to launch 60 base stations by the end of this year, with commercial launch touted for September (see Austrian Op Invests in WiMax).

“This year’s expenses will amount to €2.5 million [$3 million],” notes the statement. “The sum of investment until 2008 will account for approx. €70 million [$85 million].”

According to WiMAX Telecom’s chairman, Dov Bar-Gera, the company will initially target rural regions such as Burgenland and Styria that suffer from weak fixed broadband infrastructure, followed by metropolitan areas. “We are aiming for a gradual expansion, but we are also targeting Vienna. We have enough sites in Vienna to cover the whole city. The big market is there... We are aiming to reach 200,000 subscribers in Austria. There are 1.2 million households still not capable of receiving ADSL or cable services. To achieve the 200,000, we must certainly be present in Vienna.”

Bar-Gera says the company is on the verge of purchasing broadband wireless equipment from Alcatel (NYSE: ALA; Paris: CGEP:PA). The French incumbent is a reseller of Alvarion’s fixed wireless BreezeMax kit (see Alvarion & Alcatel Get Fixed Up and Alvarion Breezes Into WiMax).

Alvarion terms its kit "WiMax-ready." Strictly speaking, no product can actually be described as WiMax yet, because the WiMax Forum isn't starting official interoperability tests until July. “It’s part of the contract we are sorting right now that the equipment must be capable of an upgrade,” comments Bar-Gera.

Funded by co-founders Bar-Gera and Werner Kastzler, the startup has also received an undisclosed investment from InCentive Private Equity Holding AG.

“We are now in discussions with different potential investors, but I am not in a hurry for two reasons,” adds Bar-Gera. “Our final equipment costs will be lower than expected as prices of equipment are certainly dropping quite significantly at the moment… The other issue is that we are looking into other countries. I would like to add at least one additional license before we raise another round of funding. Our first target is central and eastern Europe.”

— Justin Springham, Senior Editor, Europe, Unstrung

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