1. INTRODUCTION
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We refer to our earlier announcements dated 22 February 2011, 23 February 2011 and 21 April 2011 in relation to the MOU.
Pursuant to Paragraph 9.29 of the Bursa Malaysia Securities Berhad (“Bursa Securities”) Main Market Listing Requirements (“Main LR”), Telekom Malaysia Berhad (“TM”) wishes to announce that it had on 3 June 2011 entered into a HSBB Service Agreement (“HSBB Service Agreement” or “Transaction”) with Celcom Mobile Sdn Bhd (“Celcom Mobile”), a subsidiary of Celcom, whereby Celcom Mobile is desirous and TM has agreed to provide Celcom Mobile the HSBB Services upon the terms and conditions contained therein.
In general, the HSBB Service Agreement is a frame agreement which sets out the general terms and conditions that governs the provision of HSBB Services which consists of HSBB (Access) Services, HSBB (Transmission) Services and/or HSBB (Connection) Services. The specific terms and conditions of the HSBB Services are stated in the respective Schedule, which forms an integral part of the HSBB Service Agreement.
As at 3 June 2011, Celcom Mobile has agreed to subscribe the HSBB (Access) Services.
2.0 SALIENT POINTS OF THE HSBB SERVICE AGREEMENT
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The salient points of the HSBB Service Agreement are as follows:-.
2.1 Scope of the HSBB Service Agreement
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(a) TM shall supply, deliver, install and commission the HSBB Services so as to enable Celcom Mobile to utilize the HSBB Services.
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(b) In further consideration of the provision by TM to Celcom Mobile of the HSBB Services, Celcom Mobile shall grant to TM its mobile virtual network operator services ("MVNO Services") which shall cover all segments including but not limited to consumer, small medium enterprise and large enterprise. The details of the terms and conditions of the MVNO Services shall be elaborated in a separate agreement.
2.2 Term
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(a) Term of the HSBB Service Agreement
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The HSBB Service Agreement shall be effective from the date of the said agreement and shall continue to be in full force and binding unless terminated earlier by either Party.
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(b) Term of the HSBB (Access) Services
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Three (3) years from the first SG Commencement Date.
(I) Minimum Subscription Period at the Service Gateway (SG) (II) Minimum Subscription Period at the Broadband Termination Unit (BTU) Port
Two (2) years from the BTU Commencement Date.
The Minimum Subscription Period for the HSBB (Access) Services are as follows:
3.0 RATIONALE FOR ENTERING INTO THE HSBB SERVICE AGREEMENT
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The signing of the HSBB Service Agreement with Celcom Mobile reiterates TM’s commitment to boost the HSBB ecosystem locally by getting service providers to come on board and roll out their differentiated value-added services directly to consumers. The transaction also strengthens TM’s position as the nation’s premier ‘open access’ wholesale service provider.
4.0 BRIEF INFORMATION ON PARTIES 4.1 TM
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TM, a public listed company duly incorporated in Malaysia on 12 October 1984, has an authorised share capital of RM5,040,003,021 divided into 5,000,000,020 ordinary shares of RM1.00 each, 1 Special Rights Redeemable Preference Share of RM1.00, 2,000 Class C Non-Convertible Redeemable Preference Shares (“NCRPS”) of RM1.00 each, 1,000 Class D NCRPS of RM1.00 each and 4,000,000,000 Class F Redeemable Preference Shares of RM0.01 each. The issued and paid up share capital of the Company is RM3,577,404,906 divided into 3,577,401,980 ordinary shares of RM1.00 each, 1 Special Rights Redeemable Preference Share of RM1.00, 2,000 Class C NCRPS of RM1.00 each and 925 Class D NCRPS of RM1.00 each. The principal activity of TM is the establishment, maintenance and provision of telecommunication and related services.
4.2 Celcom
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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 is a wholly-owned subsidiary of Axiata Group Berhad (“Axiata”). 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 (GSM900 and GSM1800) and 3G cellular services and provides mobile telecommunication services in Malaysia under the brand name ‘Celcom’.
4.3 Celcom Mobile
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Celcom Mobile was incorporated in Malaysia on 15 July 1976 under the name of Jareen Sendirian Berhad. On 20 April 1993, it changed its name to MRCB Telecommunication Sdn Bhd and following that to Telekom Cellular Sdn Bhd and TM Cellular Sdn Bhd on 19 September 1996 and 23 August 2001 respectively before assuming its present name on 23 March 2005. The issued and paid-up share capital of Celcom Mobile stands at RM313,000,000 comprising 313,000,000 ordinary shares of RM1.00 each. The principal activity of Celcom Mobile is provision of mobile communication services, network services, application services and content.
5.0 FINANCIAL EFFECT 5.1 Share Capital The transaction would not have any effect on the issued and paid-up share capital of TM. 5.2 Earnings and Net Assets
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The Transaction is not expected to have any material effect to the earnings and net assets of the TM Group for the financial year ending 31 December 2011.
6.0 APPROVALS REQUIRED
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The Transaction is not subject to shareholders or any government authorities’ approval.
7.0 DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS’ INTEREST
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- Tunku Dato’ Mahmood Fawzy Tunku Muhiyiddin, a nominee Director of Khazanah, a common major shareholder in TM and Celcom; and
- Dr Farid Mohamed Sani, alternate director to Tunku Dato’ Mahmood Fawzy Tunku Muhiyiddin in TM is also a Director of Axiata and Celcom.
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 Transaction by virtue of their position as a nominee director of Khazanah:
8.0 DIRECTORS’ STATEMENT
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The Board of TM (save for Tunku Dato’ Mahmood Fawzy Tunku Muhiyiddin and Dr Farid Mohamed Sani) after having considered the rationale of the transaction is of the opinion that the Transaction is in the best interest of TM.
9.0 AUDIT COMMITTEE STATEMENT
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The estimated value of the proposed transactions under the HSBB Service Agreement have been incorporated in TM’s Shareholders’ Mandate for Recurrent Related Party Transactions (“RRPT Mandate”) which was approved by shareholders at the Extraordinary General Meeting held on 10 May 2011.
As disclosed in the circular to shareholders on the RRPT Mandate dated 15 April 2011, the Board Audit Committee of TM, (save for Tunku Dato’ Mahmood Fawzy bin Tunku Muhiyiddin, an Interested Director by virtue of his position as a nominee Director of Khazanah, a common major shareholder), is of the view that the transactions under the RRPT Mandate (“Mandated RRPT Transactions”) are in the best interest of TM and having reviewed the procedures and guidelines for review and approval of RRPT, is of the opinion that the Mandated RRPT Transactions will be undertaken on terms not more favourable to the related parties than those generally available to the public and are not detrimental to the interest of the minority shareholders of TM.
This announcement is dated 3 June 2011.
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