1.0 INTRODUCTION
TM wishes to announce that pursuant to its procurement tender exercise, the Company has awarded a contract to Celcom Axiata Berhad (Celcom) for the provision of 4G Multi Operator Core Network services (4G MOCN) to webe digital Sdn Bhd (webe), a subsidiary of the Company (4G MOCN Award).
2.0 4G MOCN SERVICES
4G MOCN is an alternative network sharing technology which complements the existing 2G and/or 3G Domestic Roaming (DR) services arrangement through an agreement which was entered into between the Company, webe and Celcom on 28 January 2016.
The provision of 4G MOCN services will further improve the network coverage of webe services, while webe continues to expand its current LTE network coverage.
2.1 Scope of the 4G MOCN Award
Pursuant to the LOA, Celcom shall provide to webe the 2G and/or 3G and/or 4G DR and/or 4G MOCN services (where applicable) for voice, short messaging service (SMS) and data.
2.2 Duration
The period for the provision of the services in the 4G MOCN Award is 3 years. The value of the 4G MOCN Award shall be determined based on usage and the rates as stipulated in the 4G MOCN Award.
3.0 RATIONALE FOR 4G MOCN AWARD
This 4G MOCN Award will enable webe to further enhance its existing network coverage. This current initiative is in line with TM’s continuous efforts to improve customers’ experience and its aspiration towards a converged digital lifestyle.
In addition, this will also support the Government’s aspiration to expand the broadband coverage and reachability to the general population.
4.0 BRIEF INFORMATION ON PARTIES
4.1 TM
TM, a public listed company duly incorporated in Malaysia on 12 October 1984, has issued shares of 3,757,935,749 comprising 3,757,934,823 ordinary shares, 1 Special Rights Redeemable Preference Share and 925 Class D Non-Convertible Redeemable Preference Shares. The principal activities of TM are the establishment, maintenance and provision of telecommunications and related services.
4.2 webe
webe was incorporated in Malaysia on 11 February 2002 as a private limited company under the name of MIB Comm Sdn Bhd and changed its name to Packet One Networks (Malaysia) Sdn Bhd on 24 January 2007. It subsequently assumed its present name on 29 April 2016. webe has issued shares of 27,505,791 ordinary shares held by Mobikom Sdn Bhd (72.85%), a wholly-owned subsidiary of TM, Packet One Sdn Bhd (18.91%), a wholly-owned subsidiary of Green Packet Berhad and SK Telecom Co. Ltd. (8.24%). The principal activity of webe is the provision of last mile broadband network infrastructure facilities and services.
4.3 Celcom
Celcom, a public company duly incorporated in Malaysia on 5 January 1988, has issued shares of 1,237,534,681 comprising 1,237,534,681 ordinary shares. 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 1995, Celcom was one of the first operators in Malaysia to provide digital services through its GSM 900 network and subsequently launched its 3G and 4G services in 2005 and 2013 respectively. Celcom currently operates 2G, 3G and 4G LTE and provides mobile telecommunication services in Malaysia under the brand name ‘Celcom’.
5.0 FINANCIAL EFFECT
5.1 Share Capital
The 4G MOCN Award would not have any effect on the issued share capital of TM.
5.2 Earnings and Net Assets
The 4G MOCN Award is not expected to have any material effect to the earnings and net assets of TM Group for the financial year ending 31 December 2019.
6.0 APPROVALS REQUIRED
The 4G MOCN Award is not subject to shareholders or any government authorities’ approval. TM will procure its shareholders’ approval for a mandate at the next annual general meeting on recurrent related party transactions under the 4G MOCN Award pursuant to paragraph 10.09 (2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
7.0 DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS’ INTEREST
Save as disclosed below, none of the Directors and other major shareholders of TM and/or persons connected to them has any interest, whether direct or indirect, in the 4G MOCN Award:
a) Khazanah Nasional Berhad (Khazanah), a common major shareholder of both TM and Axiata Group Berhad (Axiata). Celcom is a wholly-owned subsidiary of Axiata;
b) Minister of Finance Incorporated (MOF Inc), the holding company of Khazanah;
c) Dr. Farid Mohamed Sani, a nominee Director of Khazanah;
d) Dato’ Asri Hamidin
@ Hamidon, a nominee director of MOF Inc; and
e) Encik Faisal @ Pisal Abdul Ghani, alternate director to Dato’ Asri Hamidin @ Hamidon.
8.0 AUDIT COMMITTEE STATEMENT
The Board Audit Committee (BAC) of TM, having considered all aspects of the 4G MOCN Award is of the view that the 4G MOCN Award is in the best interest of TM, fair and reasonable and on normal commercial terms, and is not detrimental to the interest of the minority shareholders of TM.
The above view is arrived after having considered that the proposed transaction will generate greater value for TM Group in the pursuit of its cost reduction initiatives.
9.0 STATEMENT BY THE BOARD OF DIRECTORS
The Board of Directors of TM save for the Interested Directors, namely Dr. Farid Mohamed Sani, Dato’ Asri Hamidin @ Hamidon and his alternate, Encik Faisal @ Pisal Abdul Ghani, having considered the recommendations of the BAC and the rationale of the 4G MOCN Award, is of the view that the 4G MOCN Award is in the best interest of TM Group.
10.0 TRANSACTION WITH THE SAME RELATED PARTY FOR THE PRECEDING 12 MONTHS
Save for the proposed 4G MOCN Award and recurrent related party transactions of revenue and trading nature, there were no other transactions entered into between the Company with the same related party for the 12 months preceding the date of this announcement.
This announcement is dated 21 February 2019.
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