PRIVA ... Apr10

It is finalising terms for a possible takeover of a competitor and is in advance talks with another as the ICT outsourcing and consulting services player continues to seek growth through mergers and acquisitions (M&A).

One of the target companies is a telecommunication outfit while another is involved in the information communications technology (ICT) industry.

It will fund these acquisitions with internally generated funds, while using its gearing to mainly finance IT outsourcing contracts.

It had in May 2009 taken over the listing status of Airocom Technology Bhd, now known as Airocom Technology Sdn Bhd, via a reverse takeover (RTO) exercise.

Airocom is involved in mobile gateways and system integration projects to do with communications. The takeover provided Privasia with the platform to enter the telecommunication sphere. The acquisition of Airocom also came with a profit guarantee of RM4.9 million for Privasia at group level for each of the financial years ended Dec 31, 2008 (FY08) and FY09.

Barely six months after the Airocom RTO, Privasia acquired a 70% stake in another communication related company, IPSAT Sdn Bhd, for RM1 million in December 2009. IPSAT is principally engaged in provision of system integration services for ports and logistics, IT outsourcing, e-procurement and wireless communications solutions.

Privasia is also seeking to secure contracts from the Internet and High Speed Broadband (HSBB) service providers, where Privasia could deploy, manage and maintain these infrastructures on behalf of the operators for a fee, while getting the operators to outsource some of the installation, management and maintenance work.

Privasia was awarded with the contract by Jalur Lebar Nasional Sdn Bhd (Jalenas) last month to design, supply and install equipment for the first phase of the HSBB network implemented by Jalenas. The first phase involved the setting up of HSBB infrastructure in Kuantan, Pahang.

Airocom's clients Digi and TM are also involved in the broadband and Internet services, and both have broadband licences in 3G. Telekom is also a major landline Internet service provider, and has recently rolled out its own HSBB service.

Privasia has RM75 million in secured contracts that will last the company for another three to five years. More than 40% are recurring contracts (long term contracts that offer recurring income).

In the longer term, Privasia aims to capture 45% of the total ICT outsourcing services and solutions market share in South East Asia in 10 years, said Puvanesan. For FY09 ended Dec 31, Privasia recorded a net profit of RM1.05 million on the back of RM27.16 million in turnover.