Acquisition of Covage

Axia Announces New Joint Venture Partner for Covage

Calgary, Alberta – Axia NetMedia Corporation (Axia) today announced, its partner in Covage, VINCI Networks (VINCI) has entered into a share purchase agreement (the SPA) with Cube Communications Infrastructure (Cube Communications) and Cube Infrastructure Fund SICAV-SIF (Cube Fund and, together with Cube Communications, Cube) pursuant to which Cube will purchase all of the shares held by VINCI in Covage and Covage’s sister company, Covage Services SAS (Covage Services). Upon closing, which is subject to certain government approvals, Axia will enter into a shareholders’ agreement with Cube with Axia and Cube each holding 50% of Covage and Covage Services and will have equal representation on Covage’s executive committee. Cube will make an initial payment to VINCI of €30 million with a commitment to pay an additional €36 million during the next three years depending on Covage’s results.

Art Price, Chairman and CEO said, “The Cube investment is an important step in Covage’s evolution as a growing operating company. VINCI has provided the partnership with the benefit of their skills while Covage was focused on network construction and has been a major influence on Covage becoming a major player in the French marketplace. Axia has appreciated VINCI’s support and commitment.” Mr. Price added, “Covage is our first business outside of Canada and through continuing growth in market penetration, it is now beginning to generate positive cash flows creating a solid platform for future profitability. To date we have invested approximately €55 million into Covage. We remain committed along with Cube to expand Covage’s business. With Covage focused on growing the business and operating its network segments, we believe that partnering with a company specializing in investing in the further development of the telecommunications infrastructure is the logical next step in the evolution of our European business.”

Created in 2006, Covage has established a nationwide Next Generation Network (NGN) comprised of 15 regional network segments and a 3,700 km national fibre network backbone. Covage’s enhanced service level and national reach has attracted a wide range of local, regional, national and international Retail Service Providers (RSPs) as they deliver retail services to their customers. In addition to traditional RSPs, Covage’s efforts are also focused on attracting new customers that are specialized in the provision of Web Services and that offer services remotely using fibre-based connectivity, such as video security surveillance or enterprise data management.

Covage’s business strategy is three pronged. Firstly, Covage continues to identify and respond to new network segment opportunities that complement its existing assets. A recent example is its win to activate and operate the submarine cable between Corsica and the mainland of France. Secondly, it is targeting business parks which take advantage of a government initiative to encourage migration of business parks from DSL to fibre optic services. To date, Covage has 210 business parks with Fibre to the Premise services available to 9,400 potential end users and recently Covage was selected to operate an enterprise network for a period of ten years for the city of Nîmes in southwestern France. Thirdly, Covage is taking active part in the French government’s Fibre to the Home (FTTH) initiative in semi-dense and rural areas. Covage was awarded the Chevry-Cossigny FTTH Pilot Project in Seine-et-Marne on December 17, 2010. The Chevry-Cossigny Pilot Project will connect 1,250 residences to Covage’s existing Sem@for77 network segment.

About Cube
Cube Fund is a billion Euro infrastructure investment fund focused on strategic investments in transport, energy, environment and telecommunications sectors mainly located in the European Union which generate cash flows with long-term, regulated income and solid growth potential. Cube Communications is a wholly owned subsidiary of Cube Fund which holds Cube’s interests in the telecommunications sector. Cube Fund is managed by Natixis Environnement and Infrastructures Luxembourg SA.

About Axia
Axia sells Real Broadband™ and passive services on Next Generation Networks that have implemented the Axia NGN Solution. To date, the Axia NGN Solution has been implemented in Alberta, France, Singapore, Spain and Massachusetts. Axia trades on the Toronto Stock Exchange under the symbol “AXX”.