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To: 2MAR$ who wrote (78)	6/17/2001 2:38:21 PM
From: 2MAR$	Read Replies (1) \| Respond to of 208838

Nortel's Israeli unit sees slow sector recovery until next year By Steven Scheer JERUSALEM, June 17 (Reuters) - The current slowdown in the global telecoms sector is likely to continue for at least another year and forecasts of a recovery this year are unrealistic, the head of Nortel Networks Israel said on Sunday. Baruch Dahan, who took up his appointment as Chief Executive of Nortel Networks Israel three months ago after working for Nortel in the U.S. and Canada, said he was optimistic that the sector would rebound. But asked if he expected the sector to recover later this year, as some analysts have predicted, he said: "I don't believe that. This is an adjustment period and will take a while, at least until mid-to-late next year." Canada-based Nortel Networks Corp. <NT.N>, the world's largest maker of telecommunications equipment, shocked world markets on Friday by warning of a $19.2 billion second quarter loss. Its announcement followed a raft of warnings by other telecoms company that have been hit by the slowdown in the U.S. economy. Nortel said it would slash 10,000 jobs in addition to the 20,000 job cuts announced in April -- about one-third of its global workforce. "The corporation is making a tough decision but I think we are in a good position. We have to go through this turmoil another year before we see a breakthrough," Dahan added. He said that despite the global slowdown in the telecoms sector, the company continued to do brisk business in Israel. "The industry is going through some turmoil," Dahan said. "In the U.S., it has been very severe. In Europe, they are feeling the heat a little bit, but here in Israel, we are feeling it, but there is business to be done." INVESTMENT IN ISRAEL HIGH Dahan noted that investment in Israel's telecoms market was high because the Jewish state was behind other Western countries in improving its infrastructure, partly because regulators have dragged their feet the past few years. "Nortel in Israel had a decent first quarter and we expect to meet our numbers in the second quarter," Dahan said, declining to give specific figures. "We are profitable and a good business for Nortel." Nortel Networks Israel, which is 72 percent owned by Nortel and 28 percent by Israeli holding company Koor Industries <KOR.N>, is about a year old although Nortel has operated in Israel for more than 20 years through a satellite office. Telecoms firm Telrad does much of its local research and development. The company says it has its hands full -- both with customers and with growing competition from the likes of the U.S. Cisco Systems <CSCO.O>, France's Alcatel <CGEP.PA>, Finland's Nokia <NOK1V.HE> and Sweden's Ericsson <LMEb.ST>. Among its main projects, Nortel Israel is working to upgrade state-run phone company Bezeq Israel Telecom's <BEZQ.TA> infrastructure with more modern switches. Nortel is improving infrastructures at mobile phone operators Cellcom -- which is planning to move into the GSM market -- and Pelephone. It is also working to build a new network for Ofek, which plans to take on Bezeq once regulators allow competition in the domestic phone market. Among Nortel's most successful businesses in Israel is selling private branch exchanges and switching to financial institutions, Dahan said. "Elsewhere there is excess capacity but here we are slightly behind so there are still opportunities," he said, praising regulators for taking a slow approach to new ventures such as third-generation cellular phones. ((Jerusalem newsroom, +972-2-537-0502, jerusalem.newsroom@reuters.com)) REUTERS * end of story *