NEWS
(REUTERS) INTERVIEW -- Israel's Internet Gold eyes Europe
By Steven Scheer
NEW YORK, Dec 2 (Reuters) - Eli Holtzman says being a top
player in Israel's growing Internet scene is not enough.
The chief executive of Tel Aviv-based Internet Gold
<IGLD.O> has visions of not only being the No. 1 Internet
access provider and electronic commerce Web site in Israel, but
in parts of Europe as well.
"As a public company trading on an American stock market
(Nasdaq) Internet Gold has to branch out of Israel," Holtzman
said, noting "possibilities and opportunities" in Europe.
Internet Gold is a leading ISP in Israel. But the company
plans to buy into ISPs in Poland, the Czech Republic, Romania,
Hungary, Turkey, Jordan, Egypt and the Palestinian Authority --
most of which Holtzman said can be had at bargain prices.
"We have $25 million allocated for it," Holtzman said in an
interview with Reuters in New York. "We are speaking to several
candidates in each country."
Indeed, Internet Gold has started its planned shopping
spree and recently bought a 20 percent stake in an Internet
provider in Greece for $850,000. Internet Gold said it ready to
exercise its option in Greece's fourth-largest ISP and raise
its stake to 50.1 percent.
"We're not going for the incumbents; we're going for
smaller ISPs," Holtzman said. "We find the No. 4 or 5 ISP, buy
into it, bring our know-how and resources, and together we go
from four to three to two and hopefully to No. 1."
But Holtzman knows it will take time, perhaps another few
years to become successful.
"One must remain patient; we have time," Holtzman said.
Analysts have targeted an aggressive share price level of
18 to 20 by year-end. Shares of Internet Gold were off 1/2 at
12-7/8 at midday Thursday on the Nasdaq stock market.
Holtzman said the stock could reach analysts' target early
in 2000. "It may take a while more but we should be there
fairly soon," he said.
He noted that after strong third quarter results, in which
revenues grew by 65 percent over the third quarter of 1998,
Internet Gold should post solid fourth quarter results. "We are
confident we won't disappoint the analysts," he said.
Internet Gold, formerly Golden Lines Ltd., started
providing Internet access in Israel in January of 1996 to
15,000 subscribers. Now, the firm has about 180,000 subscribers
for a 40 percent market share in Israel.
Holtzman sees plenty of room for growth in Israel in the
next few years. Total Internet subscribers are currently about
450,000, which he expects to double in the next few years.
Internet penetration, he added, is just 6 percent of Israel's
population on its way to an anticipated 13 percent by 2002.
Yet, Holtzman said that to be successful, Internet Gold
must look beyond the borders of the small Middle Eastern nation
of six million people.
In Israel, Internet Gold faces fierce competition from big
names such as Netvision and Bezeq <BEZQ.TA> and from more than
a dozen small ISPs. Over the next few years, Holtzman said he
expects just two or three to survive, even after Israel opens
up the market to high-speed Internet access a year from now.
Eventually, Holtzman said he anticipates free Internet
access. Before that occurs, he said revenue from advertising
needs to rise and rebates from telephone companies for Internet
connections -- such as occur in Britain -- are necessary.
On the electronic commerce front, Holtzman said he is not
worried. Internet Gold recently launched a portal, or network
of connected sites, that receives 3 million pages views a month
-- and plans on online "mega-mall" sometime in the first half
2000.
The firm also signed a pact with Microsoft Corp. <MSFT.O>
in October in which both companies will initiate a Hebrew
language Web search service on the Israeli Gold portal -- to be
called MSN Israel.
Holtzman said he sees future revenues coming from renting
e-commerce space to various retailers.
However, while Israelis still have not fully embraced
online shopping, Holtzman said this is just a matter of time.
He estimated online sales in Israel now at just $1 million.
"The big boom will come at the end of 2001 or beginning of
2002; that's when we see half of Israel having Internet
access," Holtzman said. "It will be gradual."
(( -- U.S. Financial Markets Desk, 212-859-1867,
steven.scheer@reuters.com ))
REUTERS
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