Oslo, 3 December 2021. Reference is made to the press release issued 2 July 2021.
During 2021 Net1 International's operation in Indonesia ("Net1 Indonesia") experienced severe external challenges which impacted upon the implementation of its business plan agreed with the USD 75.5 million senior secured loan facility lenders (the "Lenders") in November 2020. In addition to the issues faced given COVID pandemic, Indonesia suffered three natural disasters in January 2021 by earthquake, flood, and volcano eruption and then the technical difficulties causing a temporary network suspension arose in June 2021. Since August 2021, 60% of the network service has been re-activated and even though revenue and overall operation has suffered, Net1 Indonesia has managed to a fair extent to maintain the subscriber count.
The Net1 Indonesia management team have been working closely with government officials to resolve technical matters and resume full network service as soon as possible, at the same time exploring Mobile Virtual Network Operator ("MVNO") / wholesale possibilities now made available through the OMNIBUS law and new opportunities given increased governmental interest in deploying internet access and online awareness to rural areas.
In parallel, Net1 Indonesia has since 2019 been in dispute with the government regarding the annual frequency fees ("BHP fees"). Even though successfully legally challenging and winning administrative court cases in this respect, Net1 Indonesia decided to change its approach whereby all lawsuits relating to historical frequency fees were officially withdrawn and after consulting with the Ministry of Communication the company officially applied for frequency fee relief via the existing legislation.
On 27 August 2021 Net1 Indonesia however received a letter from the Indonesian Ministry of Communication demanding payment in full of the 2019 and 2020 frequency fees, a total of IDR 477 billion by 27 November 2021, failing which the license would be revoked. However, this did not take into account the separate frequency fee relief process being pursued by the company.
Considering the ongoing and productive discussions on the frequency relief process with the Ministry of Communication, the Ministry of Finance and the state auditor, Net 1 Indonesia had been hopeful that these discussions would proceed to a positive conclusion. However on 25 November 2021 a letter was received from the Ministry of Communication which repeated the payment demand. Net1 Indonesia subsequently reached out to the Ministry of Communication who then sent a letter to Net1 Indonesia accepting to receive a pre-payment of IDR 100 billion and provide a one-month extension to accommodate the ongoing relief process. However, on 30 November 2021 a further letter was received, cancelling the pre-payment and extension agreement claiming the frequency license is revoked as per 30 November 2021 due to unpaid frequency fees.
As a consequence, Net1 Indonesia has suspended all network service as of midnight 30 November 2021 and is again reaching out to governmental officials on the matter. Further development on the above will be announced as soon as available.
Should the situation not be solved within shortly, this will have severe adverse effect on the operation in Net1 Indonesia and for the group as a whole and it may not be possible to continue the operations of the group.
The above matters have caused delays in financial reporting for Net1 International due to difficulties in value assessments and going concern. Net1 International intends to finalize its 2020 accounts and call for the AGM as soon as possible.
Whilst the Shareholders and Lenders reached an agreement in principle on the short-term funding package, with the goal to support the new business further, uncertainty remains in respect of availability of both short-term and the long-term financing structure and requirements, especially with respect to the recent developments.