Kannaltex Bhd ... Jun 09

Kannaltec Bhd is demanding RM20 million from the Selangor state government as compensation for the state’s delay in allowing the company to implement broadband infrastructure services under a concession awarded in 2007.

It is also learnt that company has given the state until June 30, 2009 to settle the amount, failing which it will proceed with court action.

The company sent the letter of demand after exhausting all avenues of negotiations with state officials to allow Kannaltec to proceed to provide services at all designated sites, which they have been delaying.

If the state government does not pay the compensation, the company might also consider terminating the concession and suing the government.
Kannaltec’s subsidiary Obnet (formerly Intelligent Edge Solutions) was awarded a 20-year RM420 million concession by the Selangor state government in April 2007 to connect government offices and related agencies with a state-of-the-art broadband infrastructure, dubbed SelangorNet (SelNet).

The infrastructure was to connect all of the state’s government departments, statutory bodies, municipal councils, local authorities and government-linked companies, and is aimed at enabling these organisations to utilise voice, video and data services. The network was also to support applications such as video-conferencing, surveillance monitoring and disaster recovery.

Obnet was to design, install, operate and maintain a data centre and all broadband-related services at 345 designated state government offices. It is learnt, however, that only 32 sites have been connected so far since the concession was awarded.

The Kannaltec official said the Pakatan Rakyat state administration was delaying the implementation of the broadband infrastructure and that Kannaltec was losing money invested in equipment.

The previous (Barisan Nasional) administration wanted to modernise the connectivity of the government and related agencies when it awarded the concession. But the current administration is not moving fast enough.

Kannaltec has three main business units, namely logistic informatics, shared services and outsourcing and e-government services.

For the financial year ended March 31, 2009 (FY09), Kannaltec posted a net loss of RM3.71 million compared to a net profit RM3.6 million in FY08, but revenue rose to RM21.13 million from RM17 million.