BY Fraser Tennant
In a move that forms a new market leader in Southeast Asia, multinational telecommunications groups Axiata Group Berhad and Telenor Asia Pte Ltd have agreed to merge their mobile operations in Malaysia – Celcom Axiata Berhad and Digi.Com Berhad – in a transaction valued at $15bn.
The merged company will combine the scale, experience, competencies and financial strength of both global telecommunications groups with the market knowledge of two well-established local companies – uniquely positioned to address Malaysia’s increasing digital service adoption and expectations of better connectivity.
Upon completion of the transaction, Axiata and Telenor will each own 33.1 percent of the merged firm.
“We remain aligned in our intentions to deliver a strong value proposition that will enable our customers to participate more confidently as Malaysia transitions toward a digital economy,” said Dato’ Izzaddin Idris, president and group chief executive of Axiata. “We look forward to delivering better value and choices to benefit society, especially in bridging the divide in rural areas and taking of new opportunities in this digitally accelerated environment.
“Assuming a smooth transition, post integration period, we are expecting to see improvement in earnings before interest, taxes, depreciation and amortisation (EBITDA) and cashflow margins in the combined entity in step with our ongoing commitment to maximise dividend payout for our shareholders,” added Mr Idris.
Furthermore, Axiata and Telenor have agreed to nominate Mr Idris as chair, and Jørgen C. Arentz Rostrup, executive vice president and head of Asia at the Telenor Group, as deputy chair of the merged company, which will be renamed to Celcom Digi Berhad subject to shareholder approval.
“We look forward to partner with Axiata to realise the potential of the proposed merged company,” said Mr Rostrup. “The telecommunications industry is at the beginning of an exciting digital shift, and new technologies are going to change how we develop and deliver services for both the private and public sector.”
The transaction is expected to complete by the second quarter of 2022, subject to the approval of both Axiata and Digi shareholders, regulatory approvals and other customary terms and conditions.
Mr Rostrup concluded: “With this merger we bring together competencies, financial strength and scale to go beyond connectivity and implement technology that further advances our customers’ digital experience.”
News: Axiata, Telenor sign $15 bln deal to merge Malaysian telecoms units