AXIATA GROUP BERHAD (FORMERLY KNOWN AS TM INTERNATIONAL BERHAD) (“AXIATA”) - MEMORANDUM OF UNDERSTANDING FOR A STRATEGIC PARTNERSHIP BETWEEN AXIATA AND HUAWEI TECHNOLOGIES CO. LTD.
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INTRODUCTION
We are pleased to announce that Axiata had, on 18 November 2009, entered into a Memorandum of Understanding for a Strategic Partnership (“MOU”) with Huawei Technologies Co. Ltd. (“Huawei”), a company incorporated under the laws of People Republic of China, having its principal place of business at Huawei Industrial Base, Bantian Longgang District, Shenzhen, 518129, whereby Axiata and Huawei agree to explore opportunities to cooperate with each other in search for optimal and mutually beneficial solutions in areas of innovation, procurement and financing.
Announcement Details :
Salient Features of the MOU
The cooperation contemplated under the MOU focuses on the following areas:-
Exploring innovative solutions in technology, financing and procurement, using a co-developed framework that will cover Business Model Innovation, Product Innovation, Process Innovation and Experience Innovation (“Axiata-Huawei Strategic Cooperation”);
Streamlining Axiata's procurement process through the use of global frame agreements between Huawei and the Axiata Group which will govern the supply of products and services by Huawei; and
Huawei, in association with other Chinese financial institutions, to arrange financing options such as Export Credit Agency backed Facility, Vendor Financing Facility, Fixed Term Non-Cancellable Lease Structure and Direct Loan Facility (“Financing Facilities”) at favourable financing terms for procurement of equipment by Axiata Group from Huawei.
The non-binding MOU is valid for a period of 2 years from the abovementioned date unless mutually terminated.
RATIONALE OF ENTRY INTO MOU
The entry by Axiata into the MOU is to establish a strategic partnership with Huawei, a leader in providing next-generation telecommunication solutions to operators around the world and already a large supplier of telecommunications equipment to Axiata Group, in areas to improve Axiata's revenue stream in the longer term via increased utilisation in terms of network traffic simulation and faster time-to-market, while reducing costs for the Axiata Group through significant savings in terms of capital and operating expenditures. The Axiata-Huawei Strategic Cooperation will also have the added benefit of realising business efficiencies and competitive advantage through cash flow improvement, risk sharing and timely purchasing.
In addition, the collaboration with Huawei, particularly on the Financing Facilities, would enable Axiata to gain a competitive advantage from having access to Financing Facilities of lower financing cost, innovative financing structures and flexible financing tenure.
Notwithstanding the above, the Financing Facilities will inter-alia, be subject to the approval of the relevant authorities and the Boards of Axiata and Huawei.
EFFECTS OF THE ENTRY INTO MOU
The entry by Axiata into the MOU does not have any effect on the issued and paid-up share capital of Axiata, shareholdings of substantial shareholders of Axiata and the consolidated net assets or earnings for the financial year ending 31 December 2009.
INTEREST OF THE DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED TO THEM
None of the Directors, major shareholders and/or persons connected to Directors or major shareholders has any direct or indirect interest in the MOU.
