Network Collaboration Agreement Between Digi Telecommunications Sdn Bhd ("DIGI Tel") & And Celcom Axiata Berhad ("Celcom")(DIGI Tel And Celcom Shall Collectively Be Referred To Hereafter As "Parties")

Back Jan 18, 2011
Type Announcement

(DiGi Tel and Celcom shall collectively be referred to hereafter as “Parties”)
Contents 1) Introduction

Reference is made to the announcements on the Memorandum of Understanding (“MOU”) entered on 10 June 2010 between DiGi Tel, a wholly-owned subsidiary of DiGi.Com Berhad (“DiGi”), and its major shareholder, Telenor Asia Pte Ltd, and Axiata Group Berhad and Celcom to explore the viability of long-term collaboration on network infrastructure sharing in Malaysia (“Proposed Collaboration”) and subsequent extension on 10 December 2010 of the said MOU.

As a result of a joint technical and financial feasibility study arising from the MOU, the Board of Directors of DiGi is pleased to announce that DiGi Tel had on 18 January 2011 entered into a Network Collaboration Agreement (“NCA”) with Celcom to jointly implement the Proposed Collaboration.

2) Salient terms of the NCA

The NCA defines the scope and principles for the implementation of the Proposed Collaboration on the following areas:
(a) Sites;
(b) Access Transmission (microwave links);
(c) Aggregation Transmission; and
(d) 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.

3) Rationale

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.

The full realisation of the 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. The Parties 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.

4) Approval of Shareholders and Authorities

The entry by DiGi Tel into the NCA is not subject to the approval of the shareholders of DiGi and/or regulatory authorities.

5) Financial Effects

The entry into the NCA does not have any effect on the issued and paid-up share capital of DiGi and is not expected to have any material effect on the earnings, gearings and net assets of the DiGi Group for the financial year ending 31 December 2011.

6) Directors’ And Major/Substantial Shareholders’ Interest

None of the directors and major shareholders of DiGi and/or persons connected to them have any interest direct and/or indirect in the NCA.

7) Directors’ Opinion

The Board of DiGi is of the opinion that the NCA is in the best interest of DiGi Group.

This announcement is dated 18 January 2011.


Announcement Info

Company Name DIGI.COM BERHAD  
Stock Name DIGI    
Date Announced 18 Jan 2011  
Category General Announcement
Reference No CC-110118-44959