As a result of a joint technical and financial feasibility study arising from the MOU, the Board of Directors of Axiata is pleased to announce that Celcom had today entered into a Network Collaboration Agreement (“NCA”) with DiGi Tel to jointly implement the Proposed Collaboration.
The NCA defines the scope and principles for the implementation of the Proposed Collaboration on the following areas:-
- Sharing of telecommunication sites;
- Access Transmission (microwave links);
- Aggregation Transmission; and
- Trunk Fibre Transmission.
The duration of the NCA is for a period of three (3) years and may be further extended for such other period upon such terms and conditions to be mutually agreed by the Parties.
Under the terms of the NCA, the Parties will for the initial phase, implement the areas under the Proposed Collaboration covering 218 sites from each of the Parties. During this phase, the Parties will review and verify their feasibility study in order to agree on the subsequent phases involving the consolidation and upgrading over 4,000 sites and fibre transmission network towards full implementation by 2015.
The Proposed Collaboration will result in increased operational efficiencies for the Parties.
It is geared towards addressing the increase of data capacity requirements with the objectives of sharing investment, reducing cost and better asset utilisation all of which is a strategic move for the mature telecommunications industry to be operationally efficient. Specifically, the sharing will remove duplication of base station sites, address escalating rental fees, reduce utility bills and transmission costs, optimise deployment of base stations per area, and redeployment of equipment between redundant and new sites.
Full realization of cash savings is estimated to be in the range of RM2.2 billion combined over 10 years. This is subject to further validation upon completion of the initial phase. Both Parties, however, expect to see incremental savings as early as 2012 and gradually ramping up to an average annual savings of RM150-RM250 million combined after 2015.
With the network collaboration, end-users will be able to benefit from improved quality of service from upgrading of transmission to much higher capacity.
- Approval of Shareholders and Authorities
The entry by Celcom into the NCA is not subject to the approval of the shareholders of Axiata and/or regulatory authorities.
The entry by Celcom into the NCA does not have any effect on the issued and paid-up share capital of Axiata and is not expected to have any material effect on the earnings, gearings and net assets of the Axiata Group for the financial year ending 31 December 2011.
- Directors’ and Major Shareholders’ Interest
None of Axiata’s Directors, major shareholders and/or persons connected to them has any direct or indirect interest in the NCA.
The Board of Axiata is of the opinion that the entry into the NCA is in the best interest of Axiata Group.
This announcement is dated 18 January 2011
