Potential collaboration between Axiata Group Bhd and DiGi will result in operating and capital expenditure savings, according to ECM Libra Investment Research.

'In addition to operating expenditure savings, we believe that both parties may benefit from significant capital expenditure savings as well as in terms of 3G rollout where 3G network coverage is still spotty,' it said in a research note today.

'This will free up more cash flow for DiGi to sustain its high dividend payouts, as well as Axiata which is expected to announce a more concrete dividend policy in third quarter this year for its maiden dividend payout in financial year 2011,' it said.

On June 10, 2010, Axiata announced that its wholly-owned subsidiary Celcom Axiata Bhd has signed a memorandum of understanding with DiGi and Telenor Asia Pte Ltd, a major shareholder of DiGi, to explore the viability of long-term collaboration of sharing network infrastructure in Malaysia.

A definitive agreement is expected to be reached before end of the year, subject to agreement by both parties on the long-term economic and operational viability of the partnership.

On the telecommunication industry development, ECM Libra said broadband continued to be the focus of growth among the telco players with Telekom Malaysia expanding its high-speed broadband service coverage to 18 new areas nationwide while 3G operators -- Maxis, Celcom, DiGi -- and WiMAX operators, particularly Green Packet, continued to extend their mobile broadband coverage this year.

'However, we believe that Celcom and DiGi may possibly slow down their 3G network coverage roll-out this year given the potential active network-sharing collaboration,' the research firm said. -- BERNAMA