ACCOUNT PROFILE

KAB inks MoU to build and operate telecommunication tower project in the Philippines

Posted on 15 July 2021

Electrical and mechanical engineering services provider Kejuruteraan Asastera Bhd (KAB) is partnering with the Philippines-based LCS Holdings Inc and ATS Venture Group Sdn Bhd to build and operate a telecommunication tower project in the Philippines.

KAB has entered into a tripartite memorandum of understanding (MoU) with LCS and ATS, according to a statement to Bursa Malaysia.

"This MoU affirms LCS' intentions to collaborate with KAB on a turnkey solution to build and operate a telecommunication tower project in the Philippines, a contract which was secured by LCS.

"KAB will take a lead role in the financial arrangements, meanwhile ATS will be the lead technology partner to support the project.

"Amongst others, LCS' responsibilities include the provision of local site sourcing and acquisition, as well as communicating with the end customers and relevant Philippines' authorities," said KAB.

The group said KAB and ATS shall be the preferred suppliers for procurements of related products for this project.

KAB, LCS and ATS possess extensive experience in steel fabricating, supplying, constructing and erecting steel telecommunication towers, bringing valuable advantages to the project, noted the Bursa announcement.

Upon completion of the project, the telecommunication towers will be leased to Dito Telecommunity Corp in the Philippines, which is co-owned by China state-owned China Telecommunications Corp, the parent company of China Telecom, for a period of 15 years, KAB added.

With an option to extend for an additional 10 years, KAB said it will be able to enhance its recurring income with the long-term concession signed with Dito for the next 25 years.

"This new income stream, which will contribute positively to KAB, is expected to provide a revenue of RM15 million with a profit of approximately RM3 million per year," added KAB.

KAB managing director Datuk Lai Keng Onn said the company's venture into the telecommunication industry will grow KAB's stable recurring income continuously, in addition to its existing business.

"This partnership is indeed an exceptional opportunity for KAB to continue expanding its footprint in the Southeast Asia region. Going forward, we intend to invest and build 300 telecommunication towers with each tower being 45 metres tall.

"I look forward to jointly build on this new long-term strategic partnership with LCS to support the Philippines' telecommunication industry, which has grown tremendously over the years, with the continuing appetite of many Filipinos in communicating through their mobile phones, accessing information through the internet, streaming and downloading videos," he added.

At noon break, KAB rose seven sen or 8.48% to 89.5 sen with some 62.6 million shares changing hands. This values the group at RM1.51 billion.

Source : The Edge