KUALA LUMPUR: The collaboration between DiGi.Com Bhd and Axiata Group Bhd, inked earlier this year, may be a precursor to more tie-ups in the local telecommunications sector, as players strive to push costs down in order to remain competitive, said DiGi CEO Henrik Clausen.
“I think you can [expect similar partnerships] because that is what we have seen in the news lately. Driving costs down and making our service more affordable for our customers is an ongoing challenge, for both the company and the industry, and I think we are on the right track,” he noted after the company’s EGM yesterday.
In addition to new tie-ups being established, present partnerships may be extended, he added.
The agreement with Celcom, signed in January, involves the in-depth sharing of network resources comprising telecommunications sites, access transmission (microwave links), aggregation transmission and trunk fibre transmission.
The partnership is expected to result in cost savings of RM2.2 billion over 10 years, beginning with savings of between RM100 million to RM200 million as early as 2012 and a gradual increase of savings to RM200 million to RM250 million from 2015.
The collaboration took off with the first phase this year.
“We have been doing phase one of the project, which basically entails working with Celcom to develop a methodology to consolidate the sites. Planning it is quite a big logistical task, but we need to find a way to do it efficiently,” said Clausen.
For the current year, he said savings from the agreement would be minimal.
The company previously said the projected cash savings would involve both capital and operating expenditure.
“There will be relatively sizable savings when we start gaining momentum. Basically we will save on rent, power, operation and maintenance, but we also plan to build new coverage jointly so there will be savings in capital expenditure too,” he said.
The company previously allocated an annual capital expenditure of RM700 million for the three years from 2010.
The investment will go towards modernising its current network in order for it to undertake more coverage and capacity.
Clausen said the company has invested RM300 million as at 3QFY11 ended Sept 30 and will only invest RM550 million of the annual allocation this year.
“We will invest roughly RM550 million, which is less than previously communicated because we have been delaying some activities. This amount will flow into next year,” he said.
He added that the capex investments will be self-funded, as the company has accumulated RM1.7 billion in operating free cash flow as at 3QFY11.
DiGi’s EGM was to propose a share split, every existing ordinary 10 sen share will be divided into 10 ordinary shares of one sen each.
“When we proposed this, our aim was to make it more affordable for investors to take a stake in the company,” said CFO Terje Borge.
This article appeared in The Edge Financial Daily, November 10, 2011.
“I think you can [expect similar partnerships] because that is what we have seen in the news lately. Driving costs down and making our service more affordable for our customers is an ongoing challenge, for both the company and the industry, and I think we are on the right track,” he noted after the company’s EGM yesterday.
In addition to new tie-ups being established, present partnerships may be extended, he added.
The agreement with Celcom, signed in January, involves the in-depth sharing of network resources comprising telecommunications sites, access transmission (microwave links), aggregation transmission and trunk fibre transmission.
The partnership is expected to result in cost savings of RM2.2 billion over 10 years, beginning with savings of between RM100 million to RM200 million as early as 2012 and a gradual increase of savings to RM200 million to RM250 million from 2015.
The collaboration took off with the first phase this year.
“We have been doing phase one of the project, which basically entails working with Celcom to develop a methodology to consolidate the sites. Planning it is quite a big logistical task, but we need to find a way to do it efficiently,” said Clausen.
For the current year, he said savings from the agreement would be minimal.
The company previously said the projected cash savings would involve both capital and operating expenditure.
“There will be relatively sizable savings when we start gaining momentum. Basically we will save on rent, power, operation and maintenance, but we also plan to build new coverage jointly so there will be savings in capital expenditure too,” he said.
The company previously allocated an annual capital expenditure of RM700 million for the three years from 2010.
The investment will go towards modernising its current network in order for it to undertake more coverage and capacity.
Clausen said the company has invested RM300 million as at 3QFY11 ended Sept 30 and will only invest RM550 million of the annual allocation this year.
“We will invest roughly RM550 million, which is less than previously communicated because we have been delaying some activities. This amount will flow into next year,” he said.
He added that the capex investments will be self-funded, as the company has accumulated RM1.7 billion in operating free cash flow as at 3QFY11.
DiGi’s EGM was to propose a share split, every existing ordinary 10 sen share will be divided into 10 ordinary shares of one sen each.
“When we proposed this, our aim was to make it more affordable for investors to take a stake in the company,” said CFO Terje Borge.
This article appeared in The Edge Financial Daily, November 10, 2011.
