Merger of telco titans
Axiata Group Bhd (Axiata) and Telenor ASA (Telenor) will combine Asian operations in what is said to be a ‘mega merger of equals’ by combining Axiata and Telenor’s Asian operations within both their Asean and South Asia markets.
KUCHING: Axiata Group Bhd (Axiata) and Telenor ASA ( Telenor) will combine Asian operations in what is said to be a ‘ mega merger of equals’ by combining Axiata and Telenor’s Asian operations within both their Asean and South Asia markets.
One of the key highlights of this deal is the merger of Celcom Axiata Bhd ( Celcom) and Digi.Com Bhd ( Digi), which will in turn become the largest mobile operator in Malaysia.
While several issues and matters have yet to be determined and agreed upon, given the mutual due diligence to be undertaken shortly involving several entities across nine countries, Axiata in a statement to Bursa Malaysia yesterday opted for an early voluntary disclosure to provide transparency to its shareholders as discussions progress.
“The proposed transaction aims to enable the new merged entity to bring together Axiata and Telenor’s Asian operations unique combination of scale, competencies and vast experiences in leading and managing emerging and frontier markets,” it said in the statement.
“The parties have also stated their stipulated intention to list the merged entity on Bursa Malaysia and another major international exchange within the next few years.”
The international MergedCo on merger will have proforma revenue of more than RM50 billion and Earnings Before Interest, Taxes, Depreciation & Amortisation ( EBITDA) of more than RM20 billion and controlled operating subsidiaries in nine countries.
This is with a combined total population of more than one billion people and 300 million customers.
Additionally, the portfolio of controlled telecommunication operations shall comprise six countries with number one positions, two countries with number two positions and one market with third position within their respective markets.
“In bringing together assets from both parties, the proposed transaction has the potential to deliver up to around RM20 billion incremental value in synergies,” it added in the statement.
The proposed transaction will also potentially lead to the formation of a global top five mobile infrastructure player, by combining edotco Group Sdn Bhd (edotco), the existing Axiata TowerCo which is currently the 13th largest TowerCo globally, and Telenor’s Asian tower assets.
Lastly, the opportunity will establish the largest Innovation Center in the Region to include IoT and 5G, as well as a Global Talent Factory.
AmInvestment Bank Bhd (AmInvestment Bank) in a note
The proposed transaction aims to enable the new merged entity to bring together Axiata and Telenor’s Asian operations unique combination of scale, competencies and vast experiences in leading and managing emerging and frontier markets Axiata
prior to the merger announcement said it would be positive if this deal materializes as this could reduce the number of competitors, effectively enabling the merged entities to leapfrog to top positions in terms of market share in countries which are involved in the merger.
“We also expect significant synergies and economies of scale given the elimination of resource duplication and operational redundancies,” it added.
“Additionally, with Telenor’s proven track record and joint management role, we expect Axiata’s discount to its sum or parts valuations to be narrowed given the reduced exposure to overseas assets which bear higher risk.
“Nevertheless, such an extensive restructuring exercise could be hindered by each country’s regulatory oversight, bearing in mind the strategic security and telecommunication issues which will be raised.”