8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934

December 19, 2011

Date of Report (date of Earliest Event Reported)

VELATEL GLOBAL COMMUNICATIONS, INC.

(Exact Name of Registrant as Specified in its Charter)

NEVADA	000-52095	98-0489800
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File No.)	(I.R.S. Employer Identification No.)

12526 High Bluff Drive, Suite 155, San Diego, CA 92130

 (Address of principal executive offices and zip code)

(760) 230-8986

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name or former address, if changed from last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01Entry into Material Definitive Agreement

On December 19, 2011, VelaTel Global Communications, Inc., a Nevada corporation and the registrant responsible for the filing of this Form 8-K (“Company”) entered into a Standby Business Cooperation Agreement (“Standby BCA”) with 7L Capital Partners Emerging Europe LP (“7L”) and the other shareholders (collectively and including 7L “Shareholders”) of Kerseyco Trading Limited (“Kerseyco”), a Cyprus limited liability company, to acquire at least a 51% equity interest in Kerseyco and (indirectly) its operating subsidiary, VeratNet, d.o.o. (“Verat”), a Serbia corporation  As used in the Standby BCA, “VelaTel” refers to the Company and its wholly owned subsidiary, Gulfstream Capital Partners, Ltd. (“Gulfstream”), a Seychelles corporation, to the extent the Company elects to acquire its equity interest in Kerseyco through Gulfstream, in which case all obligations, representations and warranties of the Company set forth in the Standby BCA shall apply jointly and severally to both the Company and Gulfstream.  The material terms of the Standby BCA are as follows (certain capitalized terms are as defined in the BCA):

1.Verat’s operations include but are not limited to providing wireless broadband access (“WBA”) services to subscribers in Serbia using radio frequency spectrum licenses granted by appropriate Governmental Authorities in Serbia.  Verat’s assets that are used exclusively or primarily to deliver WBA services include eleven (11) fully installed base transceiver stations (“BTS”) and related network core equipment.

2.The Company has been negotiating with 7L (who is acting on behalf of itself and the other current Shareholders of Kerseyco) for the Company to acquire a majority interest in Kerseyco.  Such negotiations have occurred in tandem with negotiations for the Company to also acquire a majority interest in Herlong Investments Limited (“Herlong”) a holding company with subsidiaries who have telecommunications assets and operations in Croatia and Montenegro.  7L is also a shareholder in Herlong.  On December 6, 2011, the Company, Herlong, and the shareholders of Herlong signed a business cooperation agreement (“Herlong BCA”) for the Company to acquire a 75% equity interest in Herlong (the Company disclosed the terms of the Herlong BCA by Current Report on Form 8-K filed December 9, 2011).  The Herlong BCA is projected to close in early January 2012.  The Parties to the Kerseyco transaction have reached agreement on all material terms of a Business Cooperation Agreement (“BCA”), in a form substantially similar to the Herlong BCA, but for logistical reasons, including the Company’s public disclosure obligations as a US public company, the Parties require additional time to assemble all schedules that will be included in the BCA.  The Parties expect to sign the BCA by January 15, 2012 and to Close the BCA by February 15, 2012.  The Parties are entering into the Standby BCA so that the Company can proceed with negotiations with its equipment vendor ZTE Corporation (“ZTE”), and with preliminary engineering in preparation for the improvements to Verat’s WBA infrastructure assets contemplated in the BCA.

3.The Company shall acquire a 51% equity interest in Kerseyco (“Investor’s 51% Investment) in exchange for all CAPEX, OPEX, debt service, and other negative cash flow through the date the overall operations of Kerseyco and Verat become cash flow positive, including the full cost and/or financing to design, purchase, install and deploy 11 base transceiver stations (BTS) and other components of equipment and software capable of delivering WBA service to a minimum defined subscriber service level, along with expenses associated with administration, sales, marketing, customer support, office space required at such subscriber service levels.  The Company’s minimum cash commitment (“Investor’s 51% Cash Commitment”) is €2,400,000, payable as (a) the full value of the down payment for any of the equipment included in the 51% Investment that Investor has paid to ZTE prior to Closing of the BCA; (b) €350,000 at Closing of the BCA; and (c) installments of at least €250,000, each payable every 90 days following Closing of the BCA, until Investor’s 51% Cash Commitment is paid in full.

4.At such time as is advantageous, either before or after the signing or Closing of the BCA, the Company may decide to increase its equity interest in Kerseyco to 65% (“Investor’s 65% Investment”) in exchange for an increased level of CAPEX, OPEX, debt service and other negative cash flow associated with expanding Verat’s WBA network to a total of 26 BTS and other components of equipment and software capable of delivering WBA service to a minimum defined subscriber service level, along with expenses associated with administration, sales, marketing, customer support, office space required at such subscriber service levels.  The Company’s minimum cash commitment (“Investor’s 65% Cash Commitment”) is €3,000,000, which amount is inclusive of Investor’s 51% Cash Commitment, payable as (a) the full value of the down payment for any of the equipment included in the 65% Investment and not previously paid to ZTE pursuant to Investor’s 51% Investment; (b) the same €350,000 at Closing of the BCA, if the Company decides to make Investor’s 65% Investment instead of Investor’s 51% Investment and (c) additional installments of at least €250,000, each payable the earlier of every 90 days following Closing of the BCA or following the last payment made pursuant to Investor’s 51% Investment, until Investor’s 65% Investment is paid in full.

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5.At such time as is advantageous after the Closing of the BCA, either as a result of subscriber growth within Verat’s existing license territory, and/or if Verat is awarded licenses covering additional geographic regions in Serbia, the Company may increase its equity interest in Kerseyco to 75% (“Investor’s 75% Investment”) in exchange for an increased level of CAPEX, OPEX, debt service and other negative cash flow associated with expanding Verat’s WBA network to a total of 50 BTS and other components of equipment and software capable of delivering WBA service to a minimum defined subscriber service level, along with expenses associated with administration, sales, marketing, customer support, office space required at such subscriber service levels.  The Company’s minimum cash commitment (“Investor’s 75% Cash Commitment”) is €4,200,000, payable as (a) €400,000 upon the Company’s decision to increase to Investor’s 75% Investment, (b) the amount required as down payment on any of the equipment included in Investor’s 75% Investment and not previously paid to either ZTE or the Company  pursuant to Investor’s 51% and 65% Cash Commitments combined; and (c) additional installments of at least €250,000, each payable the earlier of every 90 days following Closing of the BCA or following the last payment made pursuant to Investor’s 51% and/or 65% Cash Commitment, until Investor’s 75% Cash Commitment is paid in full.

6.The Company shall be issued shares of Kerseyco’s Common Stock commensurate with making Investor’s 51%, 65% and 75% Investment.  Whenever the Company’s equity interest in Kerseyco is increased, such increase may be achieved by any combination of transfer of shares of Common Stock from other Shareholders or issuance of new additional shares, in the discretion of Kerseyco’s Board of Directors.

7.The Company’s Cash Commitments described in Paragraphs 3(c), 4(c), and 5(c) above are each subject to a limitation that at such time as an Independent Accountant confirms, based on audited financial statements, that the operations of Kerseyco and Verat have achieved cash flow positive (after due allowance for reserves for taxes, working capital and other contingent liabilities), any future payments called for under such Paragraphs (i.e. 3(c), 4(c) or 5(c))shall be deferred.

8.The Company and 7L shall each be entitled to Redeemable Preference Shares, as that term is understood and at the same issuance price and redemption rate described in the Herlong BCA.  At Closing of the BCA, 7L shall be entitled to 7,000,000 Redeemable Preference Shares.  At Closing of the BCA, Investor shall be entitled to that number of Redeemable Preferred Shares representing the value of the amount Investor pays at Closing, plus such amount as Investor pays to ZTE prior to Closing of the BCA and which is credited against either Investor’s 51% or 65% Investment, as the case may be.  Investor and 7L shall each be entitled to additional Redeemable Preference Shares based on amounts either invests from time to time either after Closing of the BCA or prior to Closing of the BCA and not paid or incurred as of the Effective Date of the Standby BCA.

9.The Standby BCA is a full binding and enforceable contract as of its Effective Date.  For the avoidance of doubt, all terms of the Herlong BCA not unique to or inconsistent with the Standby BCA are incorporated by reference in the Standby BCA, and the term “Shareholders” has the same meaning as the Herlong BCA with the substitution of the shareholders of Kerseyco for the shareholders of Herlong.

A fully executed copy of the Standby BCA is attached hereto and incorporated by this reference as Exhibit 10.1 to this Form 8-K.

On December 19, 2011, the Company issued a press release announcing the signing of the Standby BCA.  A copy of the press release is attached hereto and incorporated by this reference as Exhibit 99.1 to this Form 8-K.

Item 9.01Exhibits

10.1	Business Cooperation Agreement between VelaTel Global Communications, Inc. and Kerseyco Trading Limited and its Shareholders
99.1	Press Release

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	VelaTel Global Communications, Inc.,
Date:December 19, 2011	By:	/s/ George Alvarez
		Name: George Alvarez
		Title: Chief Executive Officer

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EX-10.1

EXHIBIT 10.1

STANDBY BUSINESS AGREEMENT

THIS STANDBY BUSINESS COOPERATION AGREEMENT (“Standby BCA”), is entered into as of December 19, 2011 by and between the following parties and shall be effective when signed by all of the Parties, the last of whom shall fill in the date such Party signs (“Effective Date”):

1.VelaTel Global Communications, Inc., a United States (“US”) corporation, organized under the laws of the state of Nevada, with a principal place of business at 12526 High Bluff Drive, Suite 155, San Diego, California duly and legally represented by George Alvarez, its Chief Executive Officer (“Investor” or “VelaTel”), which terms shall also refer to VelaTel’s wholly owned subsidiary, Gulfstream Capital Partners, Ltd., a Seychelles corporation (“Gulfstream”) to the extent VelaTel elects to acquire the Investor’s Shares through Gulfstream, in which case all obligations, representations and warranties of Investor set forth in this Agreement and the Schedules thereof shall apply jointly and severally to both VelaTel and Gulfstream);

2.7L Capital Partners Emerging Europe LP a limited partnership incorporated in Guernsey, having its registered office in Guernsey, Carinthia House, 9-12 The Grange, St. Peter Port, GY1 4BF, duly and legally represented by Mr. Salvator Levis (“7LCPEELP”);

3.Kerseyco Trading Limited, a company incorporated in Cyprus and having its registered office in Cyprus (Agapinoros 2, Iris Tower, 7th Floor Flat/Office 702 Nicosia) duly and legally represented by Mr. Salvator Levis (“Company” or “Kerseyco”);

4.Verica Radovic (“Shareholder 1”);

5.Angelina Jevtic (“Shareholder 2”);

6.Nikola Zelic (“Shareholder 3”);

7.Zivana Olbina (“Shareholder 4”); and

8.CLEARCON D.O.O. (formerly: SECI D.O.O.). Beograd (“Shareholder 5”);

(all of the parties mentioned under number 2, 4, 5, 6, 7 and 8 hereinafter referred to jointly as Shareholders).

(Each and all of the aforementioned referred to individually as a “Party” and collectively as the “Parties”)

RECITALS

A.The Company is the sole owner of Verat D.O.O. (“Verat”).

B.Verat is a private company for telecommunication services limited by stake, incorporated in Serbia, having its registered office at 37 Boulevard Vojvode Mišića Str, Belgrade.  Verat’s operations include but are not limited to providing wireless broadband access (“WBA”) services to subscribers in Serbia using radio frequency spectrum licenses granted by appropriate Governmental Authorities in Serbia.  Verat’s assets that are used exclusively or primarily to deliver WBA services include eleven (11) fully installed base transceiver stations (“BTS”) and related network core equipment.

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C.Investor is in the business of designing, building, deploying, expanding and operating WBA networks in key markets throughout the world.  Investor has access to investment capital and relationship with vendors advantageous to the business interests of Investor and the Company.

D.7LCPEELP is an investment fund that also holds an equity interest in other companies with telecommunications assets and operations in the Balkans region.

E.Investor and 7LCPEELP, on behalf of the Shareholders, have been negotiating the terms of a Business Cooperation Agreement (“BCA”) for Investor to acquire a majority interest in the Company.  Such negotiations have proceeded in tandem with negotiations for Investor to also acquire a majority interest in Herlong Investments Limited (“Herlong”) a holding company with subsidiaries who have telecommunications assets and operations in Croatia and Montenegro.

F.Investor, 7LCPEELP, Herlong, and the other shareholders of Herlong have recently signed a business cooperation agreement (“Herlong BCA”) for Investor to acquire a 75% equity interest in Herlong.  The Herlong BCA is projected to close in early January 2012.

G.The Parties have reached agreement on all material terms of the BCA, in a form substantially similar to the Herlong BCA, but for logistical reasons, including Investor’s public disclosure obligation as a US public company, the Parties require additional time to assemble all schedules that will be included in the BCA.  The Parties expect to sign the BCA by January 15, 2012 and to Close the BCA by February 15, 2012.

H.The Parties enter into this Standby BCA so that Investor can proceed with negotiations with its equipment vendor ZTE Corporation (“ZTE”), and with preliminary engineering in preparation for the improvements to the Company’s WBA infrastructure assets contemplated by the BCA.

I.The Shareholders shall be entitled to sell all the Common Shares they hold in the Company before or after Closing to a new holding company they shall establish (“NewCo”), in which case NewCo shall enjoy the rights and bear the obligations of the Shareholders as if NewCo were an original contracting party hereto.

NOW, THEREFORE, in consideration of the foregoing premises and the respective representations and warranties, covenants and agreements contained herein, the sufficiency of which is hereby acknowledged, the Parties agree as follows:

AGREEMENT

Pursuant to the terms of the BCA, upon terms as similar as possible to the form of the Herlong BCA, and subject to Closing of the BCA, which shall occur on or before February 15, 2012:

1.Investor shall acquire a 51% equity interest in the Company in exchange for the following investment (“Investor’s 51% Investment”):

(a)All CAPEX, OPEX, debt service, and other negative cash flow through the date the overall operations of the Company and Verat become cash flow positive, including the full cost and/or financing to design, purchase, install and deploy the following described infrastructure equipment suitable for Verat’s existing WBA operations using Verat’s current and any future WBA licenses, of at least the following minimum components of equipment and service levels;

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(b)Replacement of Verat’s existing 11 BTS with new BTS manufactured by ZTE, including such new antennae, radios and back-up batteries as are necessary for operation of the new BTS, lease payments on sites, and all civil works and towers required to make the sites legally and structurally amendable to installation of the new BTS equipment;

(c)Replacement of such portion of Verat’s existing core network equipment, switches and software as is necessary to make it compatible with the 11 new BTS and to provide WBA service to at least 33,000 total subscribers based on no more than a 300% over-subscription level (i.e. as many as 11,000 subscribers online simultaneously);

(d)Provision for national transport of internet connectivity between core network equipment and remote cities, plus point-to-point backhaul via fiber or microwave;

(e)Administrative, sales, marketing and customer support staff, office space and office equipment required to operate the WBA network(s);

(f)Consumer premises equipment (CPE), dongles, tablets, handsets, Mi-Fi cards and other devices compatible with the new BTS and core equipment and offered for sale to subscribers to enable connection to the WBA network and carried as inventory for sale;

(g)Taxes, license fees and other amounts accruing to Governmental Authorities in connection with operations of the WBA network; and

(h)Debt service on any amounts borrowed from banks to finance any of the foregoing items or other elements of CAPEX or OPEX, as well as debt service on pre-existing debt, to be retired in the ordinary course and according to their various terms.

2.Subject to Section 10, Investor’s minimum cash commitment for Investor’s 51% Investment (“Investor’s 51% Cash Commitment”) is EUR 2,400,000, payable as follows:

(a)EUR 350,000 at or before Closing of the BCA;

(b)The full value of the down payment for any of the equipment included in Investor’s 51% Investment that Investor has paid to ZTE prior to Closing of the BCA; and

(c)Installments of at least EUR 250,000, each payable at least every 90 days following Closing of the BCA, until Investor’s 51% Cash Commitment is paid in full.

3.Investor shall be issued Common Stock of the Company representing Investor’s 51% Investment at Closing of the BCA.

4.At such time as is advantageous, either before or after the signing or Closing of the BCA, Investor may increase its equity interest in the Company to 65% in exchange for the following additional investment (“Investor’s 65% Investment”):

(a)Such additional CAPEX, OPEX, debt service, and other negative cash flow to finance, design, purchase, install and deploy the following described additional infrastructure equipment of at least the following minimum components of equipment and service levels;

(b)Fifteen additional new BTS manufactured by ZTE (bringing the total to 26 BTS) including such additional antennae, radios and back-up batteries as are necessary for operation of the additional BTS, lease payments on sites, and all civil works and towers required to make the sites legally and structurally amendable to installation of the additional BTS equipment;

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(c)Replacement or upgrade of such portion of Verat’s then existing core network equipment (including components previously replaced or upgraded under Investor’s 51% Investment), switches and software as is necessary for the total 26 BTS to provide WBA service to at least 78,000 total subscribers based on no more than a 300% over-subscription level (i.e. as many as 26,000 subscribers online simultaneously);

(d)Such increased quantities of the items described in Section 1(d)-(h) as is necessary based on the additional equipment, software and subscriber capacity described in Section 4(a)-(c).

5.Subject to Section 10, Investor’s minimum cash commitment for Investor’s 65% Investment (“Investor’s 65% Cash Commitment”)is EUO 3,000,000, which amount is inclusive of Investor’s 51% Cash Commitment, payable as follows:

(a)The same EUR 350,000 at or before Closing of the BCA, if Investor decides to make Investor’s 65% Investment instead of Investor’s 51% Investment;

(b)The full value of the down payment for any of the equipment included in Investor’s 65% Investment and not previously paid to ZTE pursuant to Investor’s 51% Investment;

(c)Additional installments of at least EUR 250,000, each payable every 90 days following either Closing of the BCA or the last payment Investor makes under Section 2(c), until Investor’s 65% Cash Commitment is paid in full.

6.Investor shall be issued Common Stock of the Company representing Investor’s 65% Investment at Closing of the BCA, or if Closing of Investor’s 51% Investment has already occurred, within 30 days of making the down payment described in Section 5(b).  Such increase in Investor’s equity in the Company may be accomplished by any combination of transfer of shares of Common Stock from Shareholders or issuance of new additional Shares, in the discretion of the Company’s Board of Directors.

7.At such time as is advantageous after the Closing of the BCA, either as a result of subscriber growth within Verat’s existing license territory, and/or if Verat is awarded licenses covering additional geographic regions in Serbia, Investor may increase its equity interest in the Company to 75% in exchange for the following additional investment (“Investor’s 75% Investment”):

(a)Such additional CAPEX, OPEX, debt service, and other negative cash flow to finance, design, purchase, install and deploy the following described additional infrastructure equipment of at least the following minimum components of equipment and service levels;

(b)Twenty-four additional new BTS manufactured by ZTE (bringing the total to 50 BTS) including such additional antennae, radios and back-up batteries as are necessary for operation of the additional BTS, lease payments on sites, and all civil works and towers required to make the sites legally and structurally amendable to installation of the additional BTS equipment;

(c)Replacement or upgrade of such portion of Verat’s then existing core network equipment (including components previously replaced or upgraded under Investor’s 51% and 65% Investments), switches and software as is necessary for the 50 BTS to provide WBA service to at least 150,000 total subscribers based on no more than a 300% over-subscription level (i.e. as many as 50,000 subscribers online simultaneously);

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(d)Such increased quantities of the items described in Section 1(d)-(h) and as is necessary based on the additional equipment, software and subscriber capacity described in Sections 7(a)-(c).

8.Subject to Section 10, Investor’s minimum cash commitment for Investor’s 75% Investment (“Investor’s 75% Cash Commitment”) is EUR 4,200,000, which amount is inclusive of Investor’s 51% and 65% Commitments, payable as follows:

(a)EUR 400,000 upon Investor’s decision to increase to Investor’s 75% Investment;

(b)The full value of the down payment for the equipment included in Investor’s 75% Investment and not previously paid to either ZTE or the Company pursuant to Investor’s 51% and 65% Cash Commitments combined; and

(c)Additional installments of at least EUR 250,000, each payable every 90 days following the last payment Investor makes under Section 2(c) or 5(c), until Investor’s 75% Cash Commitment is paid in full.

9.Investor shall be issued Common Stock of the Company representing Investor’s 75% Investment within 30 days after making both of the payments described in Section 8(a) and (b).  Such increase in Investor’s equity in the Company may be accomplished by any combination of transfer of shares of Common Stock from Shareholders or issuance of new additional Shares, in the discretion of the Company’s Board of Directors.

10.Investor’s Cash Commitment with respect to installments under Sections 2(c), 5(c) and 8(c) are each subject to a limitation that at such time as the Independent Accountant confirms, based on audited financial statements, that the operations of the Company and Verat have achieved cash flow positive (after due allowance for reserves for taxes, working capital and other contingent liabilities), any future payment called for under such Sections (i.e. 2(c), 5(c), or 8(c)) shall be deferred.

11.Investor and 7LCPEELP shall each be entitled to Redeemable Preference Shares, as that term is understood and at the same issuance price and redemption rate described in the Herlong BCA.  At Closing of the BCA, 7LCPEELP shall be entitled to 7,000,000 Redeemable Preference Shares.  At Closing of the BCA, Investor shall be entitled to that number of Redeemable Preferred Shares representing the value of the amount Investor pays at Closing, plus such amount as Investor pays to ZTE prior to Closing of the BCA and which is credited against either Investor’s 51% or 65% Investment, as the case may be.  Investor and 7LCPEELP shall each be entitled to additional Redeemable Preference Shares based on amounts either invests from time to time either after Closing of the BCA or prior to Closing of the BCA and not paid or incurred as of the Effective Date of this Standby BCA.

12.This Standby BCA is a full binding and enforceable contract as of the Effective Date.  For the avoidance of doubt, all terms of the Herlong BCA not unique to or inconsistent with this Standby BCA are incorporated by this reference, and the term “Shareholders” shall have the same meaning as the Herlong BCA with the substitution of the shareholders of the Company for the shareholders of Herlong.

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IN WITNESS WHEREOF, the Parties hereto have caused this Standby BCA to be duly executed by their respective authorized officers as of the date first above written.

7LCPEELP 7L CAPITAL PARTNERS EMERGING EUROPE LIMITED By /s/ Salvator I. Levis Salvator I. Levis, Authorized Signatory for 7L Capital Partners Emerging Europe L.P.	INVESTOR VELATEL GLOBAL COMMUNICATIONS, INC. By: /s/ George Alvarez George Alvarez, its Chief Executive Officer
Company KERSEYCO TRADING LIMITED By /s/ Aristides C. Fronistas Aristides C. Fronistas Authorized Signatory for Kerseyco Trading Limited
VERICA RADOVIC /s/ Salvator I. Levis Salvator I. Levis, as attorney in fact per POA	ANGELINA JEVTIC /s/ Salvator I. Levis Salvator I. Levis, as attorney in fact per POA
NIKOLA ZELIC /s/ Salvator I. Levis Salvator I. Levis, as attorney in fact per POA	ZIVANA OLBINA /s/ Salvator I. Levis Salvator I. Levis, as attorney in fact per POA
CLEARCON D.O.O. (formerly: SECI D.O.O) BEOGRAD By /s/ Salvator I. Levis Salvator I. Levis, as attorney in fact per POA

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EX-99.1

EXHIBIT 99.1

VELATEL ACQUIRES SERBIAN BROADBAND OPERATOR VERAT

VelaTel expands its footprint in the Balkans region by acquiring a 51% stake in holding company Kerseyco Trading Limited and its operating subsidiary VeratNet d.o.o.

SAN DIEGO, CA – DECEMBER 19, 2011 – US-based VelaTel Global Communications (OTCQB: VELA) (VelaTel), a leader in deploying and operating wireless broadband and telecommunication networks worldwide, today announced it has entered into a Business Cooperation Agreement with the shareholders of Cyprus holding company Kerseyco Trading Limited to acquire at least a 51% controlling interest in Kerseyco and its Serbian operating subsidiary, VeratNet d.o.o.  The transaction is expected to close in February 2012, in order to allow sufficient time for VelaTel’s auditors to conduct the work needed to report the financial results of Kerseyco and its subsidiary on VelaTel’s consolidated financial statements going forward.

Verat is one of the leading telecommunications operator and internet service providers in Serbia, offering a full range of telecommunication services, including ADSL broadband service nationwide and wireless broadband access (WBA) in three cities where it holds radio frequency licenses, including Belgrade, Serbia’s capital and largest city (population approximately 1.6 million).  Verat also offers specialty services to business customers, such as international private leased circuit services, dedicated wireless internet lines, and dedicated web server hosting.  Verat currently owns a data center, a network core, and 11 base transceiver stations (BTS).  Verat has more than 50 employees who serve more than 10,000 subscribers.

In exchange for its 51% equity stake, VelaTel will contribute CAPEX and OPEX necessary to continue Verat’s existing operations and to upgrade Verat’s existing WBA infrastructure equipment with higher capacity equipment, which will more than double the subscriber capacity of Verat’s WBA network and allow Verat to add new wireless customers.  The equipment, which has been already manufactured by ZTE, will be part of the existing strategic agreement that VelaTel has in place with ZTE.  Based on an estimated equipment delivery date during March 2012, VelaTel expects to complete the deployment of the new equipment during the summer of 2012.  VelaTel very recently acquired companies with WBA assets in the neighboring Balkan countries of Croatia and Montenegro, and plans to deploy all three markets simultaneously, which VelaTel projects will result in significant expense savings and strategic synergies.

Under the parties’ agreement, VelaTel has the opportunity to expand its equity stake from 51% to 75% in exchange for a further expansion of the WBA network to at least 50 BTS.  The potential network expansion may occur as a result of subscriber growth within Verat’s existing license territory, or if Verat is awarded WBA licenses covering additional geographic regions in Serbia.

About VelaTel Global Communications, Inc.

VelaTel acquires spectrum assets through acquisition or joint venture relationships, and provides capital, engineering, architectural and construction services related to the build-out of wireless broadband telecommunications networks, which it then operates by offering services attractive to residential, enterprise and government subscribers.  VelaTel currently focuses on emerging markets where internet penetration rate is low relative to the capacity of incumbent operators to provide comparable cutting edge services, and/or where the entry cost to acquire spectrum is low relative to projected subscribers.  VelaTel currently has project operations in People’s Republic of China and Peru.  Additional target markets include countries in Latin America, the Caribbean, Southeast Asia and Eastern Europe.  VelaTel’s administrative headquarters are in San Diego, California.  For more information, please visit www.velatel.com.

Safe Harbor Statement

This press release contains forward-looking statements that involve risks and uncertainties.  Actual results, events and performances could vary materially from those contemplated by these forward-looking statements.  These statements involve known and unknown risks and uncertainties, which may cause the Company's actual results, expressed or implied, to differ materially from expected results.  These risks and uncertainties include, among other things, product demand and market competition.  You should independently investigate and fully understand all risks before making an investment decision.

VelaTel Contacts:

Media/Analyst Relations Kimberley Brown Core Insights 360 PR Public Relations 1-404-314-2900 kbrown@coreinsights360.com Retail Investors Tim Matula VelaTel Global Communications, Inc. Investor Relations (Toll Free) 1-877-260-9170 investors@velatel.com

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