CALGARY, Jan. 13, 2015 /CNW/ - Axia NetMedia Corporation (Axia) (TSX: AXX) announced today that its French company, Covage, has been awarded an agreement to partner with local governments to deploy a Fibre-to-the-Home (FTTH) network in Seine-et-Marne. The network will pass 319,000 homes when complete.
The department of Seine-et-Marne has a population of 1.3 million and is located east of Paris, in the region of Île-de-France. Covage owns and operates the Sem@for77 regional network, which is also located in Seine-et-Marne, since 2006.
Covage will sell a variety of dark and lit fibre services to retail service providers, which will enable the delivery of internet, video and voice services to residential end-users. The services will be deployed and managed under two legal frameworks: the Délégation de Service Public (DSP) and the Operating Contract.
First, Covage will own, build and operate a network segment, which passes 169,000 homes, under a 25 year DSP where Covage funds a portion of the build cost. The DSP is the legal framework that is used for the majority of regional networks Covage currently operates.
Second, under the Operating Contract, Covage will offer services to an additional 150,000 homes and maintain the network segment that is owned by the government. Funding for the build of this network segment will be provided entirely by the government with a license fee to be paid by Covage to the government over the life of the agreement.
In addition, Sem@for77 has exclusive rights to provide active fibre services to the 1,733 enterprise sites that the new FTTH network will pass. These are potential customers the Sem@for77 network does not currently pass and expands Sem@for77's addressable enterprise market by over 15%.
The 6,200 km network incorporates newly built infrastructure, rental of existing ducts and related infrastructure and the lease of existing fibre from Sem@for77. The aggregate investment, totaled over the 25-year contract term, is in excess of €350.0 million. This investment includes the build of the transport and distribution network segments, interconnection with Covage's national backbone and the planned cost to connect subscribers to the network.
Network construction is expected to begin later this year. By 2025 Covage plans to pass approximately 90% of DSP homes and the community plans to pass approximately 70% of Operating Contract homes.
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 €17.0 million to be made over the next five years. However, as Covage is in active talks with potential lenders, it is possible that Axia's maximum capital commitment is not reached. Axia is planning a capital contribution of €5.0 million in 2015.
Jean-Michel Soulier, President of Covage, commented "Covage is pleased to have the opportunity to provide FTTH services in Seine-et-Marne. This win builds on our relationship with the community, where we have been delivering fibre services to enterprise customers for close to a decade."
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 Seine-et-Marne. We continue to view FTTH as a major opportunity for Covage and the Seine-et-Marne win reinforces this view. We look forward to further network wins expanding the scale of Covage's FTTH operations, with the potential to significantly increase the number of homes Covage passes or has under construction, which now stands at 354,000."
Axia sells services over fibre optic communications infrastructure. Axia has networks in Alberta, France and Massachusetts and trades on the TSX 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 include those where Axia forecasts its success in winning new NGN business, the timing of completion and estimated total costs of our networks, the revenues and operating costs associated with these networks 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
For further information: please visit Axia's website at www.axia.com, or contact: Alan Hartslief, Chief Financial Officer, Axia NetMedia Corporation, (403) 538-4188, email@example.com.