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Wednesday, February 15, 2012

PT Inovisi Takes Up A 10% Stake In Nextnation

ACE-market listed mobile applications and platform provider Nextnation Communication Berhad ('Nextnation') announces that its Indonesia outsourcing customer - PT Inovisi Infracom Tbk (‘Inovisi’), is purchasing a 10% stake in the company.

The private placement by *Inovisi will effectively allow Nextnation to secure a portion of the CAPEX funds of USD5 million that it requires to set up the IT equipment and infrastructure to take on the multi-million dollar project which it recently secured from the Indonesia conglomerate.

Nextnation recently won an outsourcing project to provide mobile platform infrastructure hosting and maintenance services to Inovisi.

This project will provide Nextnation with a minimum guaranteed revenue of approximately RM67.5 million (USD22.5 million) over three (3) years. From this guaranteed revenue, the company expects to generate a 31% profit margin, or approximately RM21 million (USD7 million) over the same period.

Strengthened Vendor-Customer Partnership

Nextnation's Group CEO Larry Tey said that the 10% stake acquisition by Inovisi shows a strong vote of confidence from the customer in Nextnation.

"In awarding the project to Nextnation, this Indonesian mobile infrastructure giant chose us as its select vendor partner to take its telecommunications business to the next level in its vast and populous 250 million Indonesian market."

“In addition, the 10% equity stake acquisition indicates our customer’s confidence to work with us on a long-term basis," says Tey, adding that there is the possibility of Inovisi increasing its stake up to a total of 30% in the future.


Inovisi's chief finance officer Adrian Ooi says, "Inovisi is wants to capitalise on the booming demand for greater IP services and bandwidth in Indonesia. However this requires continuous R&D and capital expenditure to optimize our telecommunications network infrastructure data transfer across large and diverse geographic areas in Indonesia.”

"We have evaluated Nextnation and found their technology to be proven and superior. Therefore, besides awarding them with the (recent) telco IT project, we are taking a stake in Nextnation as we believe they are an excellent partner vendor to create greater synergies for both companies in this space,” says Ooi.

Significant Performance Expected

The recent outsourcing project by Inovisi allows Nextnation to export its in-house mobile platform technologies to Indonesian market where Inovisi's corporate clients are sited.

"Whilst the guaranteed revenue for Nextnation from this project is RM67.5 million over three years, we are actually looking at a revenue target of up to RM375million (USD125 million),” says Tey.

"This 10% stake purchase Inovisi only increases our confidence of achieving this greater performance for all of our shareholders as we start to capitalize on our strategic business expansion into Indonesia.”

For FYE 30 April 2011, Nextnation’s audited revenue was over RM72 million. EPS for FYE 30 April 2011 was 0.26 sen per share, while its NTA amounted to about 16 sen per share.

With the guaranteed minimum revenue from Inovisi expected to contribute from 2H of 2012 onwards, Nextnation estimates its FYE 30 April 2013 earnings to jump about 100% from its FYE 30 April 2011 figures.

Details of the Inovisi-Nextnation Private Placement

Nextnation proposes to undertake a private placement of ten per cent (10%) of its issued and paid-up share capital or 41,580,000 new Nextnation shares, to Great World Ltd - a wholly owned subsidiary of Inovisi.

The placement shares will not be priced at more than ten percent (10%) discount to the five (5)-day volume weighted average market price of Nextnation's shares immediately before the price fixing date. In any event, the placement shares will not be priced lower than its par value of RM0.10.

The actual proceeds to be raised from the proposed private placement are dependent on the final issue price, which shall be determined and fixed at a later date upon receipt of all the relevant approvals.

Upon completion of the proposed private placement exercise, the enlarged issued and paid-up share capital of Nextnation will increase from 415.80 million to 457.38 million ordinary shares of RM0.10 each

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