Stock Exchange Filings

Transactions (Chapter 10 Of Listing Requirements): Related Party Transactions

Announcement Details/Table Section :

1.0 INTRODUCTION

Axiata Group Berhad (“Axiata”) wishes to announce that its wholly-owned subsidiary, Celcom Axiata Berhad (“Celcom”) had on 25 April 2011 entered into a Shareholders Agreement with 23 other parties specifically named in ‘Schedule A’ herein (“Shareholders Agreement” or “Transaction”), to form a consortium under the name of ‘KONSORTIUM RANGKAIAN SERANTAU SDN BHD (formerly known as My Regional Network Company Sdn Bhd)’(Consortium”or“Company”).

The Consortium is formed for the purpose of implementing one of the entry points project entitled “Regional Network” which has the purpose of adding bandwidth capacity for Malaysia in anticipation of increasing demand requirements at a lower cost. This can be achieved by aggregating bandwidth capacity demand or requirements and using the aggregation of bandwidth capacity (as a form of buying power) to secure a lower price from suppliers. However, in order to minimise market distortions, the Consortium can only sell bandwidth capacity purchased to the parties and not to the open market.

2.0 SALIENT POINTS OF THE SHAREHOLDERS AGREEMENT

The salient points of the Shareholders Agreement are as follows:-.

2.1 Business of the Company

(a) The Company shall undertake the Business in Malaysia, unless otherwise agreed by the parties.

The business of the Company can be divided into two (2) portions:

(i) the procurement of bandwidth capacity from suppliers (who may be either a shareholder or third parties) for both domestic backhaul and international segment. The bandwidth capacity is to be from cable landing stations in Malaysia to Metro Points of Presence (“PoPs”) and from Metro PoPs to other Metro PoPs only; and

(ii) the wholesale supply of bandwidth capacity at Metro PoPs, to the parties only.

(b) The Company shall, subject to the Business Plan, invest in the wet portion of an international submarine cable system that will form part of the Company’s infrastructure. The investment shall include investment into a cable landing station.

2.2 Capital Structure 

The authorised share capital of the Company shall be Ringgit Malaysia Ten Million (RM10,000,000) divided into Ten Million (10,000,000) ordinary shares of RM1.00 each and may be increased from time to time in accordance with the Memorandum and Articles of Association of the Company.

The initial issued and paid-up share capital of the Company is Ringgit Malaysia Two Hundred and Forty Thousand (RM240,000) comprising Two Hundred and Forty Thousand (240,000) ordinary shares of RM1.00 each, of which each party holds an equivalent 10,000 shares of RM 1.00 each in the Company. The parties also have agreed to commit an additional capital contribution in cash of RM 40,000 each by subscribing to 40,000 ordinary shares of RM 1.00 each, at such a later time as may be determined by the Company’s Board of Directors.

The total subscription consideration for the Transaction, amounting to RM50,000, will be funded by internally generated funds.

3.0 RATIONALE FOR PARTICIPATING IN THE CONSORTIUM  

Celcom’s participation in the Consortium is in support of the Government of Malaysia’s initiative under the Economic Transformation Programme,which would enable additional bandwidth capacity for Malaysia in anticipation of increasing demand requirements at lower costs. 

The Consortium would enable all its members, including Celcom to enjoy lower bandwidth cost due to bulk purchase and economies of scale.

4.0 BRIEF INFORMATION ON PARTIES

4.1 Celcom 

Celcom was incorporated in Malaysia on 5 January 1988. The issued and paid-up share capital of Celcom stands at RM1,237,534,681 comprising 1,237,534,681 ordinary shares of RM1.00 each. Celcom was the first privately owned company in Malaysia to offer mobile services when it launched its “Art 900” analogue mobile system in 1989. In 1989, Celcom was one of the first operators in Malaysia to provide digital services through its GSM 900 network. Celcom currently operates 2G (GSM 900 and GSM 1800) and 3G cellular services and provides mobile telecommunication services in Malaysia under the brand name ‘Celcom’.

4.2 List of the parties as per ‘Schedule A’.  

5.0 FINANCIAL EFFECT

5.1 Share Capital

The Transaction would not have any effect on the issued and paid-up share capital of Axiata.

5.2 Earnings and Net Assets 

The Transaction is not expected to have any material impact to the earnings and net assets of the Axiata Group for the financial year ending 31 December 2011.

 6.0 APPROVALS REQUIRED 

The Transaction is not subject to shareholder or any government authorities’ approval.

7.0 DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS’ INTEREST 

The Transaction is a related party transaction as Khazanah Nasional Berhad (“Khazanah”), a major shareholder of Axiata is also a major shareholder of Telekom Malaysia Berhad (“TM”) and TIMEdotCom Berhad (“TdC”) as defined under Paragraph 10.02 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. TM, and its two (2) subsidiaries, Fiberail Sdn Bhd (“Fiberail”) and Fibrecomm Network (M) Sdn Bhd (“Fibrecomm”) and TT dotcom Sdn Bhd, a wholly owned subsidiary of TdC are participating members in the Consortium.

Tan Sri Dato’ Azman Hj Mokhtar and Dr Farid Mohamed Sani are representatives of Khazanah on the Board of Directors of Axiata. Dr Farid is also a member of the Board of Directors of Celcom and an alternate Director of TM. By virtue of the above relationship, Tan Sri Dato’ Azman and Dr Farid are deemed interested in the Transaction.

Save as disclosed below, none of the Directors and other major shareholders of Axiata and/or persons connected to them has any interest, whether direct or indirect, in the Transaction.

8.0 DIRECTORS’ STATEMENT 

The Board of Axiata (save for Tan Sri Dato’ Azman Hj Mokhtar and Dr Farid Mohamed Sani who have abstained from voting and deliberating on the Transaction) after having considered the rationale of the transaction is of the opinion that the Transaction is in the best interest of Axiata.

9.0 AUDIT COMMITTEE STATEMENT

The Board Audit Committee of Axiata, (save for Dr Farid Mohamed Sani who have abstained), having considered all aspect of the Transaction, is of the view that the Transaction is in the best interest of Axiata, fair and reasonable and on normal commercial terms, and is not detrimental to the interest of the minority shareholders of Axiata.

10.0 DEPARTURE FROM THE SECURITIES COMMISSION’S EQUITY GUIDELINES 

The Board of Axiata is not aware of any departure from the Securities Commission’s Equity Guidelines in respect of the Transaction. 

This announcement is dated 25 April 2010.

Attachments

1. Axiata250411.pdf (Size: 12,719 bytes)