TIDMTEL
RNS Number : 4049R
Teliti International Ltd
03 November 2011
3 November 2011
Teliti International Ltd
("Teliti" or "the Company")
Admission to AIM
Teliti International Ltd, the IT services business, is pleased
to announce that its admission to AIM and dealings in its ordinary
shares commences today. The Company's ticker is TEL.L.
The Directors consider admission to AIM to be an important step
in Teliti's development and one that will enhance its credibility
and stature in the industry, both in Malaysia and internationally,
thus enabling the Company to implement its strategy of further
market penetration in Malaysia and subsequently across Asia and the
Middle East.
The reasons for admission are as follows:
-- to provide the Company with a flexible financial structure for future growth;
-- to maintain a high level of transparency and corporate governance within the Company;
-- to assist in recruiting, retaining and incentivising skilled employees; and
-- to enable the Company to access a wide range of investors.
The Company has three subsidiaries: Teliti Solutions, Teliti
Services and Teliti Datacentres. Teliti Solutions and Teliti
Services are both debt free and profitable. Teliti Solutions
generates income from its core service offering, the provision of
IT software solutions specialising in SAP software, and Teliti
Services was established as an IBM products and services reseller
and is one of the first few Bumiputera Mainframe Systems
Integrators in Malaysia. Teliti Solutions and Teliti Services have
made significant progress in building sales and business
relationships, and have an existing customer base including the
Government of Malaysia ("GOM"), government-linked agencies and
private sector clients operating within industries ranging from oil
and gas to financial services. The third subsidiary, Teliti
Datacentres, has been set up to construct and operate a
state-of-the-art datacentre, which will offer both existing and new
clients full datacentre services that include communications
connectivity, uninterruptable power supply, distribution building
utilities and environmental services that are all necessary to
ensure a continuous environment for customers' equipment.
The Directors believe that the demand for fully-integrated
datacentre services within the Asia Pacific region, Association of
South East Asian Nations ("ASEAN") countries and the Middle East,
coupled with an established client base and underpinned by the
Company's professional and specialised staff, will provide the
Company with an additional service that will appeal to its existing
clients as well as new clients both locally and internationally.
Such belief and expertise has been endorsed by the GOM who have
identified datacentres as a key economic driver in its Economic
Transformation Programme ("ETP"), and appointed Teliti Datacentres
as one of three contributors to such a programme.
The Company has 23,530,000 ordinary shares in issue at an
admission price of 55p giving it an implied market capitalisation
of GBP12.9 million.
Daniel Stewart and Company Plc is the Company's nominated
adviser and broker.
Commenting on admission, Haji Mohamed Nasir, Chief Executive of
Teliti, said: "We believe our listing on AIM will enhance our
profile and visibility with customers and partners, particularly in
our key growth markets in the ASEAN countries, and improve our
ability to raise additional capital should this be required. The
Company is already well-positioned to benefit from the anticipated
growth in the IT services market through its strong presence in
Malaysia, quality of customer base, bespoke service offering and
experienced management team. We are particularly excited about the
completion of our datacentre and are confident about our future
prospects in this fast growing market."
Enquiries:
Teliti International Ltd
Hj Mohamed Nasir Abdul Majid, Chief
Executive Officer +603 7873 7733
--------------------
Rosmida Din, Chief Financial Officer +603 7873 7733
--------------------
Daniel Stewart and Company plc (Nomad
and Broker)
--------------------
Antony Legge, James Felix +44 (0)20 7776 6550
--------------------
Luther Pendragon
--------------------
Harry Chathli, Claire Norbury, Alexis
Gore +44 (0)20 7618 9100
--------------------
Notes to Editors
Market Opportunity
Malaysia has one of the fastest growing economies of the ASEAN
countries, which is expected to continue at 5.3% for 2011 and 5.5%
in 2012. Similarly, Malaysia is one of the fastest growing ICT
markets in Asia, with the sector contributing 9.8% of GDP in 2009,
which is expected to increase to 10.2% by 2015.
This growth is being facilitated and encouraged by the GOM,
which regards Information Communications Technology ("ICT")
development as an important strategic driver for enhancing the
competitive position of the Malaysian economy and intends to
establish the country as a global multimedia and ICT hub. The
government has invested heavily in creating the Multimedia Super
Corridor ("MSC") to attract international investors to Malaysia's
ICT industry as well as implementing a number of programmes to
encourage the adoption of broadband and other ICT processes within
the country.
Of particular importance is the datacentre industry. In January
2011, Prime Minister Najib Razak unveiled one of the projects of
the GOM's Economic Transformation Programme as 'Positioning
Malaysia as a world-class data centre hub', which aims "to grow the
data centre space from 0.5 million to 5 million sq ft by 2020 and
establish Malaysia as the preferred destination for regional data
centre investors".
Teliti Datacentres
Teliti Datacentres Market Opportunity
In January 2011, the GOM announced plans, under the auspices of
the ETP, to transform Malaysia into a high income nation by 2020.
Such transformation will be underpinned by various government
initiatives referred to as Entry Point Projects one of which is the
government's aspirations to grow datacentre space from 0.5 million
to 5 million sq ft by 2020. As a testament to Teliti Datacentres'
commitment and expected expertise in datacentres, the GOM
recognised Teliti Datacentres as one of three providers of
datacentres that will help drive Malaysia to becoming a preferred
regional location for datacentre services.
Teliti Datacentres Relationship with Cisco
On 28 April 2010, Teliti Datacentres entered into a memorandum
of understanding ("MoU") with Cisco, within which Teliti
Datacentres and Cisco set out the general basis of the working
relationship and commitments between each party to work together to
implement a datacentre ("the Datacentre") in Malaysia incorporating
Cisco products and services and to promote the services to be
provided by Teliti Datacentres therein (the "Datacentre Project").
Further to the MoU, Teliti Datacentres and Cisco executed a
Strategic Collaboration Agreement ("SCA") on 28 June 2010 and 30
June 2010 respectively which forms the basis of a working
relationship between the two parties.
The purpose of the SCA can be summarised as follows:
-- The parties express their collaborative intentions by setting
out additional obligations specifically in relation to the joint
marketing and design and business model scoping of the Datacentre;
and
-- To formally recognise the complementary resources and
contributions of each of the parties towards the further
development of the Datacentre Project.
The Datacentre
The Datacentre will be a secure, fully-integrated, carrier
neutral datacentre, located in the town of Enstek within easy reach
of Kuala Lumpur. On completion it will have a total 120,000 sq ft
of net lettable area, and as such, would be the largest datacentre
of its kind in Malaysia and one of the biggest within Asia. The
total cost of building the Datacentre, including the acquisition
cost of the land, is estimated to be approximately RM 233.4. The
initial phase, phase 1, which is expected to be completed by March
2012, will see the construction of the superstructure and the
fitting out of 45,000 sq ft of net lettable area. The expected cost
of this phase 1 is estimated at RM 187.4m of which RM 111m is
funded by Affin Bank with the balance being funded by an
intercompany loan with Teliti's parent, Teliti Computers Sdn. Bhd.,
and the utilisation of lease financing from Cisco. The design
concept phase, construction of the earthworks and substructure were
completed during the first half of this year, and the
superstructure construction is scheduled to complete at the end of
December 2011 with the Datacentre being operational at the end of
Q1 2012. The intention is for the remaining 75,000 sq ft to come on
stream over the following 12 months.
Designed around the evolving needs of clients, Teliti
Datacentres intends to incorporate equipment and staff to levels of
high availability (99.99 per cent.) with full services that include
communications connectivity, uninterruptible power supply and
distribution, building utilities and environmental services that
are all necessary to ensure a secure, continuous operating
environment for customers' equipment.
The Directors believe that the construction and operation of the
Datacentre will be the foundation for Teliti Datacentres' business
going forward - and the carrier neutrality and green building
aspects will provide an additional competitive advantage to the
business strategy.
The building will be equipped modularly with a net lettable area
of 120,000 sq ft and so Teliti Datacentres will be able to provide
new facilities immediately, should the demand arise. This will
allow Teliti Datacentres to provide customers with the latest
technology as each new stage is equipped as well as ensuring
efficiency so that Teliti Datacentres will not be incurring costs
for unused space.
On the back of the ETP public endorsements, Teliti Datacentres
has started to target the current business partners and customers
of Teliti Solutions and Teliti Services (e.g. IBM, HP, HDS and
certain GOM agencies) which require datacentre facilities in
Malaysia, and new partners that have been developed through an
existing relationship that Teliti Datacentres has with Cisco.
The marketing phase is underway and is targeting infrastructure
carriers and specific customer types. These customer types fall
into five distinct categories and Teliti Datacentres expects to
host these businesses:
-- Telecommunication Carriers;
-- Internet Service Gateway Providers;
-- Disaster recovery facilities;
-- Outsourced business operations; and
-- Application service providers.
The initial focus of the business will be to service local and
international organisations in Malaysia. In addition,
multi-national organisations will be targeted as the Directors
believe that these companies are increasingly considering Malaysia
as a cost competitive alternative to host their business units
compared with the more traditionally popular Asian countries.
Consequently, local demand will be utilised to anchor the facility
development, whilst the Directors expect international customers to
drive the expansion and demand for highly-skilled services.
Teliti Datacentres Business Model
Teliti Datacentres' intention is to organise its services into
three revenue streams: Basic Services (co-location), Managed
Services and Application Services.
Basic Services will include a dedicated facility for customers;
individual rack spaces; and private cages for customers to deploy
their own server farms. Managed and application services will
generally apply to equipment hosted in 19" equipment racks (which
typically require 20 sq ft per rack inclusive of access space) or
in customer suites/cages. Managed Services are priced on the basis
of floor space utilised.
Additionally, there will be generalised costs associated with
providing the services, such as the additional cost of
accommodating the equipment (i.e. racks), the communications
cabling required to monitor the equipment (i.e. LAN cabling per
point), the actual hardware/software infrastructure (i.e. over 3
years) or the inclusion of continuous shifts of IT staff to perform
the services.
Due to the size of Teliti Datacentres' proposed facility, Teliti
Datacentres, unlike most datacentre providers, will be able to
charge customers per slot rather than per rack (with each rack
being comprised of slots). This will enable Teliti Datacentres to
have a number of customers per rack as well as being able to
accommodate, in addition to the large multinationals, smaller
companies and start-ups by offering lower prices.
The Datacentre will initially generate revenues from rental of
its environmentally-conditioned space. The business principle
supporting this service reflects the high costs to supply and
maintain these facilities and the economies of scale that a
datacentre operator can achieve.
The Company is in advanced discussions for the pre-selling of
forty (40) per cent. of the 45,000 sq ft net lettable area and
expects these negotiations to be agreed during completion of
construction of the Datacentre. As such, the Datacentre is expected
to generate revenue as soon as it begins operations which the
Directors anticipate to commence at the end of Q1 2012. Teliti
Datacentres expects that the remaining sixty (60) per cent. of
service space will be progressively occupied by other customers
over the 12 months following the Datacentre opening. In addition,
the Directors expect contracts for the Datacentre to have a length
of 15 to 20 years, although they expect a small proportion of these
contracts to be around 5 - 8 years in length.
Whilst the revenue generated by the initial rental of space is
acknowledged to deliver relatively conservative margins (10-15 per
cent.), it is a necessary service in order to capture a market
share that can eventually be provided with higher margin services
(70-90 per cent.) such as hosting, management and operation of
customer information technology and telecommunications
equipment.
Teliti Datacentres Competitive Advantages
The Directors believe that the following competitive advantages
exist:
-- Teliti Datacentres' recognition on 11 January 2011 as a key partner under the ETP by the GOM;
-- The Datacentres' construction will be based on the GBI of
Malaysia, which will entitle both Teliti and its customers to tax
breaks;
-- As the largest facility of its type in Malaysia and one of
the biggest in Asia, Teliti will be able to offer a lot of space to
multinational companies;
-- The facility will be carrier neutral, which, in the view of
the Directors, will attract a greater customer base as it can offer
clients a competitive telecommunication rate. Teliti will have
flexibility in managing telecommunication demand and ensuring
continuous service;
-- Its competitive pricing by reason of:
o low energy costs of Malaysia;
o charge per slot rather than per rack;
o the Datacentre will be purpose-built to ensure total security
and that it can be built according to the GBI;
o the management team have industry-specific knowledge and
skills for designing, building and operating datacentre
facilities;
o political stability and good infrastructure of Malaysia;
and
o Malaysia's membership of the OIC.
Teliti Datacentres Market Size and Growth
The Directors believe that the following growth markets
exist:
-- Major customers and demand for datacentres is from the
corporate sector, telecoms industry, financial services and the
public sector;
-- Kuala Lumpur hosted the Data Centres Malaysia Regional Summit
in January this year, which was a two day conference and show piece
for the Malaysian datacentre market;
-- Over the next five years, the financial sector is expected to
grow rapidly as Malaysia seeks to become a hub for Islamic banking
and financial practices in accordance with Sharia law;
-- Multinationals have large information management
requirements, which could be met by datacentres in the region;
-- Foreign companies currently constitute thirty (30) per cent.
of customers for Malaysian datacentres, which is expected to
increase by 2013;
-- Commercial datacentre space is forecast to grow to 177,000 sq m by 2013; and
-- The government is targeting 5 million square feet of
datacentre space to be available in Malaysia by the year 2020.
The Directors believe that the following growth drivers
exist:
-- Recent global macro-economic conditions driving large
enterprises towards new models that will allow them to cut costs
and improve performance whilst extending capacity;
-- Consumer and corporate banking growth in South East Asia
leading to establishment of large support facilities including
datacentres, particularly in Singapore and Malaysia;
-- Availability of infrastructure and government incentives attracting multinational companies;
-- Lower cost of placing and maintenance in Asia;
-- Increased "virtualisation" of servers causing growth in "cloud" computing;
-- GOM requiring all its agencies to have disaster recovery facilities in place; and
-- Support by the GOM under the ETP.
Teliti Datacentres Business Progress
Teliti Datacentres has established a regional marketing office
in Singapore, which will initially provide marketing coverage in
Singapore and Hong Kong. Expansion to other regions is intended at
a later stage. In particular, Teliti Datacentres intends to take
advantage of Malaysia's membership of the OIC and to target
countries in the Middle East. In addition, Teliti Datacentres has
entered into a contract to provide proof of concept whereby it can
showcase the equipment and its models for future datacentres to
potential customers ("Customer Experience Centre"). Such an
exercise has already heralded results as Teliti Datacentres has
signed up one customer for 286 sq ft of co-location space on a 2
year term at the Customer Experience Centre, which the Directors
expect to transfer to the Datacentre when it becomes fully
operational, and the Directors are in advanced discussions for the
letting of approximately 19,000 sq ft and expect to sign contracts
once the Datacentre is completed.
Teliti Solutions
Teliti Solutions has 30 trained SAP consultants working on
several implementation projects. It focuses on the total
implementation of, and consultancy services for, SAP-based
applications. As a supporting consultant to SAP Germany, the Teliti
Solutions team provides consultation on SAP ERP Solutions projects
with core application design, configuration and customisation in
accounting, logistics, human capital management, enterprise portal
and business intelligence. The Company believes that Teliti
Solutions is now one of the few Bumiputera Status SAP
implementation partners in Malaysia.
Teliti Solutions is a certified services partner for SAP
software and offers consultation and solutions in project
management and other functional areas including financial, human
capital management, manufacturing, procurement and inventory.
Teliti Solutions generates revenue from the sale of the following
products and services:
-- Project management and project team consultancy for new projects and maintenance;
-- Individual consultancy projects whereby the SAP consultant is
assigned to the customer's project team;
-- Offshore development under which overseas development projects are brought into Malaysia;
-- Outsourcing SAP systems for customers;
-- Providing ERP Solutions processes training; and
-- The sale of SAP licences.
Teliti Solutions' consultancy services are charged at a per man
day rate, on the basis of market rates in each region. The duration
of contracts can vary and range from six months to three years
depending on customers' requirements.
Teliti Services
Teliti Services is a reseller of IBM products and services. It
specialises in IBM Mainframe and became one of the first few
Bumiputera Status Mainframe System Integrators in Malaysia.
Subsequently, Teliti Services diversified its product portfolio to
include maintenance of servers and third party storage through
business partnerships with major IT groups such as Hewlett Packard
and Hitachi Data Systems. Its customers in Malaysia are mainly in
the oil and gas sector, government-linked companies and agencies,
banking and private sectors. Existing clients include Dewan
Bandaraya Kuala Lumpur (Kuala Lumpur City Hall), Felda Prodata
Systems Sdn. Bhd., Bank Islam Malaysia Berhad, Syarikat Takaful
Malaysia Berhad (an Islamic insurance company in Malaysia), RHB
Bank Berhad and Agrobank Malaysia. In the arena of IBM Mainframe,
the Company has had long-term relationships with clients such as
Lembaga Hasil Dalam Negeri (Inland Revenue Board of Malaysia),
PETRONAS Malaysia (Petroliam Nasional Berhad, an oil and gas
corporation) and RHB Bank.
Teliti Services has a highly experienced employee base - with
some team members having careers spanning more than 20 years in the
IT sector. The business has the capacity to provide leading system
integration services by identifying, evaluating and managing the
entire application deliverables for its customers.
At present, Teliti Services generates its income from the
following sales and services:
-- Hardware and software reseller;
-- System integration work and services;
-- Maintenance of system hardware and software; and
-- Maintenance and enhancement of COMPASS application for Arkib
Negara Malaysia (National Archive of Malaysia).
The sale of system hardware and software is mainly generated
through tender bidding and direct sales with established customers.
Teliti Services also enters into commissioning and after sales
contracts with its customers.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCUORRRAWAARRA
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