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December 13, 2011

VelaTel Gets Major Stake in Holding Company Herlong Investments and Its Operating Subsidiaries
By Jyothi Shanbhag
TMCnet Contributor

US-based VelaTel Global Communications has signed new Business Cooperation Agreement with the shareholders of Herlong Investments Limited to take over a 75 percent controlling interest in Herlong and its operating subsidiaries, Novi-Net and Montenegro Connect. This whole transaction is expected to close the first week of January 2012.

VelaTel officials said that the existing management and operations employees will continue with Novi-Net, which includes 15 existing experienced employees, local brand name recognition, and a mature marketing program.

As per the new agreement, in exchange for VelaTel 75 percent equity stake, VelaTel will contribute all CAPEX and OPEX (News - Alert) necessary to deploy and operate the Croatia and Montenegro networks until the companies are cash flow positive.

The Republic of Croatia has previously granted Novi-Net a nationwide license to provide wireless broadband access (WBA) and related telecommunication services as part of its protocols to become the next member of the European Union.

The license grants the use of 42 MHz of radio frequency spectrum in the 3.5 GHz bandwidth to serve Croatia's 4.5 million citizens. Accordingly, Novi-Net has been providing WBA in five counties in northern Croatia under a regional license, since 2006 and currently owns a data center, a network core and 11 base transceiver stations (BTS) to provide WBA and related services to approximately 1,500 subscribers.

Novi-Net founder and general manager Karlo Vlah said that the national license provides the vehicle for Novi-Net to take their network to the next level and their partnership with VelaTel and the expertise and capital they bring provides the driver.

Montenegro Connect holds a similar nationwide license in Montenegro, also covering 40 MHz in the 3.5 GHz bandwidth.

VelaTel CEO George Alvarez noted, "Combining our engineering and deployment expertise with the experience and local knowledge base of Novi-Net's personnel will allow Montenegro Connect to hit the ground running and avoid many of the learning curve issues a new operator typically experiences."

Jyothi Shanbhag is a contributing editor for TMCnet. To read more of Jyothi's articles, please visit her columnist page.

Edited by Rich Steeves


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