Telenor and Axiata lay out Malaysian merger plans

Telenor and Axiata lay out Malaysian merger plans

Negotiations over a potential merger of the Malaysian mobile operations of Axiata and Telenor are reportedly at an advanced stage.

According to Bloomberg, the parties are close to reaching an agreement to merge Celcom Networks and Digi. Malaysia’s Axiata and Norway’s Telenor would each retain a 33.1% stake in the merged unit, which would be branded as Celcom Digi and would become Malaysia’s largest mobile operator by subscriber numbers with 19 million, and a combined revenue of 12.4 billion ringgit ($3 billion).

While the deal would be subject to due diligence and require the approval of Celcom’s shareholders, Digi’s board and Malaysia’s regulator, it could close as early as this quarter.

Telenor and Axiata discussed a possible merger of their Asian operations in 2019, exploring possibilities before eventually abandoning talks. The revived negotations chime with expected consolidation in Malaysia’s telecoms sector in response to government plans to construct and operate its own 5G network rather than relying on private companies for the technology. Pricing will therefore become the key differentiator for private companies, as the state-owned special purpose vehicle will render their coverage largely identical.

Axiata president and CEO Izzaddin Idris said: “As a commercially stronger and more resilient entity, Celcom Digi will help restore long term growth and capacity to the industry, especially in terms of improved profitability.”

Telenor EVP and head of Asia Jorgen Arentz Rostrup added: “Size matters, not just in the combined cellphone customers, but in having the financial capability to support Malaysia’s digital aspirations. The new entity will have size and financial capabilities to support Malaysia’s digital aspirations and lead industry development in a connected society.”

Idris was nominated to chair Celcom Digi by the operators, with Rostrup named as deputy. Celcom chief Idham Nawawi has been appointed CEO, with Digi CEO Albern Murty as deputy chief. The company will be listed on the Malaysian stock exchange, with more than 51% owned by Axiata and Malaysian institutional funds.

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