KUALA LUMPUR (Feb 15): Practice Note 17 (PN17) company Asia Media Group Bhd will collaborate with Setia Media Sdn Bhd to carry out the PJ Smart Gateway Project as part of plans to expand the group's digital advertising services into the out-of-home (OOH) market segment. Asia Media did not disclose the project value.

This follows a memorandum of understanding the two parties entered into on Dec 6 last year to explore potential collaboration opportunities together for the purpose of further expanding business operations.

"It is the intention of the board to explore business opportunities with Setia Media, which is mainly engaged in billboard rental and providing static and digital advertising, with the objective of paving a quicker access for Asia Media to venture into the OOH market segment," said Asia Media.

In a bourse filing on Tuesday (Feb 15), the group said it on Feb 10 signed a collaboration agreement with Setia Media to carry out the project, which was awarded to the latter by the Petaling Jaya City Council (MBPJ).

"The agreement will provide the parties an opportunity to collaborate based on the respective parties’ strength and forte in the static and digital OOH advertising industry.

"The term of the agreement is for a period of seven years, commencing on the date being three months from the date the identified gantries have been commissioned and fully operational," it added.

Under the deal, the parties will jointly set up advertising billboard LED gantries at identified sites.

Asia Media will also invest RM9 million to assist Setia Media to meet the costs of building, establishing and operating the identified gantries. In return, Asia Media will receive 30% of the revenue generated by Setia Media from the identified gantries, with a guarantee that the return on investment will not be less than the investment sum at the end of the term.

"It is expected that the collaboration will contribute positively to the group’s earnings upon successful implementation of the collaboration."

Asia Media slipped into PN17 status in October 2019 after its shareholders' equity fell to less than 25% of its issued capital. In August last year, its external auditor Messrs CAS Malaysia PLT highlighted a material uncertainty related to a going concern in its financial statements for the financial year ended March 31, 2021.

Asia Media shares closed unchanged at 15 sen on Tuesday, giving it a market capitalisation of RM46.7 million.