Malaysian telecoms conglomerate, Axiata Group Berhad and Norwegian state-owned telecom company Telenor ASA have reportedly signed a USD 15 billion deal to merge their operations, creating a new market major in the challenging Malaysian mobile service market.
The agreement comes at a time when the nation’s telecom providers are facing intense pressure on profits in a competitive industry environment and will have major consequences in terms of cost cuts and savings on capital expenditure, worth a net present value of over USD 2 billion.
The two companies had previously stated that they were in final talks to merge Celcom Axiata Bhd, and Telenor’s DiGi.Com Bhd, with both parties having a 33.1% stake in the newly formed company.
In this context, Celcom Digi Bhd will be listed in Kuala Lumpur as per the preliminary agreements announced earlier this year.
The merger between Malaysia’s second and third largest telecom providers will create a subscriber base of approximately 19 million, estimated annual revenues of USD 3 billion, and core profitability of USD 1.4 billion, Telenor and Axiata revealed in a statement.
If reports are to be believed, Celcom Digi will now face strong competition from the country’s largest telecoms operator, Maxis Bhd.
Representatives of Telenor and Axiata were quoted saying that the merged company will be commercially stronger, more resilient, and will have highly scaled investments to improve network quality and coverage.
They further added that the company will have a greater scale which will enable it to drive the implementation of 5G technology in the consumer segment in the future.
Axiata also revealed that 100% equity of Celcom Axiata will be transferred to Digi.Com Bhd for a total consideration of USD 4.3 billion.
The agreement, which is contingent on regulatory and other approvals, is expected to be finalized by the second quarter of 2022, cited sources close to the matter.
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