TELENOR, AXIATA REACH MERGER DEAL
New entity, to be called Celcom Digi, set to become Malaysia’s No. 1 cellular operator
AXIATA Group Bhd and Norway’s Telenor ASA are in merger talks again, but this time it will be at a reduced scale involving Celcom Axiata Bhd and Digi.com Bhd.
However, the merged entity, to be called Celcom Digi Bhd, is set to be Malaysia’s largest cellular operator.
The combination of the country’s second and third largest mobile services providers will create a company that is estimated to have an annual revenue of RM12.4 billion, core profit of RM5.7 billion and 19 million subscribers.
Maxis Bhd is the current top mobile services provider with about 9.4 million subscribers.
“(Axiata and Telenor) are in advanced discussions on the merger of the telco operations of Celcom Axiata Bhd and Digi.com Bhd,” said the companies in a joint statement yesterday.
Axiata and Telenor will each own 33.1 per cent of Celcom Digi.
With national interests firmly in place, Axiata and several Malaysian institutional funds will collectively control more than 51 per cent stake in the merged company (MergeCo).
It would also remain listed on Bursa Malaysia, they added.
“The MergeCo is expected to improve the liquidity and profile of Bursa Malaysia as one of the largest technology companies in Malaysia and among the largest market capitalisation companies of the exchange,” they said.
Axiata and Telenor previously discussed merging their Asian operations in 2019 but the talks were called off months later.
As part of the merger deal, Axiata will get the 33.1 per cent stake in MergeCo and RM2 billion cash, comprising RM1.7 billion from Digi and RM300 million from Telenor.
The planned merger comes as Malaysia moves to build and manage its own fifth generation (5G) mobile network instead of relying on private carriers. This has spurred expectations of a consolidation in the industry.
“Size matters, not just in the combined cellphone customers, but in having the financial capability to support Malaysia’s digital aspirations. We’re preparing for a new reality that goes beyond connectivity, to participate in all the new technologies that 5G will enable,” said Telenor Asia executive vice-president Jorgen C. Arentz Rostrup at a briefing yesterday.
Axiata president and group chief executive officer (CEO) Datuk Izzaddin Idris said it was no secret that the telecommunications industry continued to face long-term structural headwinds of slower growth, increased operating costs and lower profits.
“On one hand, we see prices of products and services continue to slide while capital expenditure, especially on network, quality coverage and advanced technology, continue to rise.”
Axiata and Telenor have agreed to nominate Izzaddin as chairman of Celcom Digi, Rostrup as vice-chairman, Celcom Axiata CEO Mohamad Idham Nawawi as CEO and Digi CEO Albern Murty as deputy CEO.
Izzaddin and Rostrup also dismissed the idea that the planned merger would see job cuts, reiterating the groups’ commitment to protecting employees’ welfare.