KUALA LUMPUR - Malaysian telecoms company Axiata said it will form a strategic partnership with world No. 2 telecommunications equipment maker Huawei to develop new technology and cut Axiata's equipment procurement costs.

Axiata, Malaysia's second-largest telecoms firm, operates mobile telecom services in fast-growing markets like Sri Lanka, Bangladesh, India, Indonesia and Cambodia and wants to maximise returns from these countries.

Axiata's pact with China's Huawei comes as rival Maxis Berhad, Malaysia's top mobile provider by market share, debuts this week in Southeast Asia's biggest initial offering that analysts have said may shift investor interest away from Axiata.

Axiata said on Wednesday it signed a two-year memorandum of understanding with Huawei that includes developing new technologies as well as streamlining the process of procuring Huawei equipment.

Huawi, along with other Chinese financial institutions will also arrange financing options for the Axiata to buy its products, Axiata said in a statement to the stock exchange.

The statement described the pact as a strategic partnership with Huawei... in areas to improve Axiata's revenue stream in the longer term... while reducing costs for the Axiata Group through significant savings in terms of capital and operating expenditures, the firm said.

No other details were given.

Any financing facilities would be subject to approval by Malaysian and Chinese financial authorities as well as the boards of Axiata and Huawei, said Axiata.

State investor Khazanah Nasional owns 45 percent of Axiata.

Axiata shares closed 0.6 percent lower to 3.13 ringgit on Wednesday, outpacing the broader market .KLSE that fell 0.4 percent. (Reporting by Niluksi Koswanage; Editing by Hans Peters)

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