The Selangor government is reviewing a RM400mil broadband network installation contract awarded to Kannaltec Bhd’s subsidiary Obnet Sdn Bhd and may reduce the number of installation jobs given to the company.

Kannaltec executive chairman Datuk Mohan Kandasamy said the company would ask for compensation if the contract was downsized.

“The original conditions (were) for (a) RM400mil contract involving the installation of broadband infrastructure network in 345 sites,” he said, adding that the company had completed the broadband installation work in 31 sites.

Kannaltec’s contract was awarded by the previous Barisan Nasional state government.

The present state government under Pakatan Rakyat has been reviewing contracts given under the previous administration.

Under the 20-year contract, Kannaltec was to build, operate and maintain a high-speed broadband infrastructure network that would link municipal councils, statutory bodies, government departments and government-linked companies in the state.

Meanwhile, Mohan said the company hoped to secure some outsourcing jobs from the United States and Britain in order to broaden its income base.

“We are in talks with several parties from the banking, financial and insurance industries and expect the negotiations to be concluded before year-end,” he said, adding that the expanding outsourcing business provided significant opportunities for Kannaltec.

The outsourcing business currently contributes some 45% of Kannaltec’s revenue.

Kannaltec’s Thailand operations had broke even and the company planned to venture into the Philippines market sometime this year, Mohan said.

While the company was aiming for organic growth, Mohan said Kannaltec might look for merger and acquisition opportunities locally and abroad in the next financial year ending March 31, 2010.

On Kannaltec’s public shareholding spread, Mohan said the company was confident of fulfilling the requirement in the next six months and might implement an employees share option scheme (ESOS).

“We have applied for an extension of six months to meet the required public shareholdings spread and are waiting for Bursa Malaysia’s response,” he said.

The company had earlier been given until Oct 1 to comply with Bursa’s listing requirement of having a minimum 1,000 public shareholders. It currently has about 800 public shareholders holding at least 100-share lots.

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