CALGARY, Oct. 13, 2015 /CNW/ - Axia NetMedia Corporation ("Axia") (TSX: AXX) announced today that its French company, Covage, has entered into an agreement to extend its Fibre-to-the-Office (FTTO) business to Grand Lyon. Grand Lyon has an addressable market of 22,340 business and government sites.
This win, Covage's largest FTTO agreement to date, is significant as it increases Covage's FTTO addressable market by approximately 50%. The department of Grand Lyon has a population of 1.3 million, clustered around France's 3rd largest city, Lyon. Grand Lyon is located in the southeast of France, a new operating area for Covage. As a result, Covage plans to establish a new route on its fibre backbone. The Grand Lyon agreement and expanded fibre backbone further cement Covage's position as the leading independent, pure-play fibre operator in the French market.
Covage will own and operate the Grand Lyon network for an initial term of 25 years and offer a variety of dark and lit fibre services to retail service providers. Construction is scheduled to commence in Q1 2016 and last approximately 27 months with initial revenues expected in 2017. The network has a planned length of 862km and makes extensive use of existing duct infrastructure, allowing for a rapid and cost effective build.
Axia Funding Requirement
The network will be funded by a combination of private capital, operating cash flow and government grants. Axia, as a 50% shareholder of Covage, expects its maximum capital contribution of €11 million to be made over the next 5 years. However, Covage is in active talks with lenders to secure long-term debt financing which would reduce Axia's capital contribution by up to 40%. Axia plans to make a capital contribution of €2.5 million in early 2016 to fund the establishment of the Grand Lyon DSP so network construction can commence.
Jean-Michel Soulier, President of Covage commented, "We are pleased to have the opportunity to provide FTTO services in Grand Lyon. This win adds to our growing network footprint and we look forward to delivering Grand Lyon the high-quality FTTO services we've established in many other regions of France, as well as extending our national backbone to Lyon and the south of France, creating new commercial opportunities for ourselves and our service providers."
Art Price, Chairman and CEO of Axia said, "Covage is the leading independent, pure-play fibre operator in the French market and we remain excited by the growth opportunity in France. This growth will be driven by Covage increasing its penetration in existing markets and by winning new networks, such as Grand Lyon. Covage's addressable market continues to grow; the number of FTTO sites our networks pass or will pass now stands at 72,000, the number of homes our FTTH networks pass or will pass stands at 385,000. Penetration in the existing FTTO and FTTH addressable markets is 13% and 17% respectively. We see years of accelerating growth ahead for Covage as market share is gained, network construction is completed and new networks are added."
Axia owns, operates and sells services over fibre optic communications infrastructure. Axia trades on the Toronto Stock Exchange under the symbol "AXX".
This News Release contains forward-looking statements, including, without limitation, statements containing the words "should", "believe", "anticipate", "may", "plan", "will", "continue", "intend", "expect", "estimate" and other similar expressions which constitute "forward-looking information" within the meaning of applicable Canadian securities laws. These statements are based on our current expectations, estimates, forecasts and assumptions about the operating environment, economies and markets in which we operate and are subject to important assumptions, risks and uncertainties that are difficult to predict. Examples of these statements would include those where Axia forecasts its success and timing in winning new NGN business, the timing and amount of future dividend payments, the timing of completion and estimated total costs of our networks, the revenues and operating costs associated with these networks over time, and Axia's ability to generate future cash flows and avail itself of other financing alternatives given current market conditions. The assumptions, risks and uncertainties that could cause actual results to differ materially from the forward-looking information, include, but are not limited to, changes in customer markets, changes in demand for our services, our inability to deliver services in a timely and cost efficient manner, technological change, general economic conditions and other risks detailed from time to time in our ongoing filings with the Canadian securities regulatory authorities, including those in our Annual Information Form, which filings can be found at www.sedar.com. Given these assumptions, risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise
SOURCE Axia NetMedia Corporation
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