Telenor Group and Axiata are in advanced talks regarding a potential merger of their respective Malaysian mobile operations Digi and Celcom. If a definitive agreement is reached, the operators would have equal ownership of 33.1 percent each in the merged company, with the remainder listed on the local stock market.
The merger is expected to give them increased scale and financial capabilities to take the lead on the Malaysian market, while also resulting in significant synergies. Both parties have agreed to appoint Izzaddin Idris as chair, Jorgen Arentz Rostrup as deputy chair, Idham Nawawi as CEO and Albern Murty as deputy CEO of the merged company, which would be named Celcom Digi.
The merged company would have around 19 million customers and annual revenue of MYR 12.4 billion. Ebitda before any synergies is estimated at MYR 5.7 billion.
The merger would take the form of Digi issuing new shares to Axiata. Telenor has agreed to pay Axiata around MYR 2 billion to ensure they have equal shares in the venture. Axiata said around MYR 1.7 billion would come from Digi as new debt and the balance of MYR 300 million from Telenor.
Axiata said national interests would be protected, as it and key Malaysian institutional shareholders will own more than 51 percent of the merged company. Axiata also will have the right to nominate the initial Chairman and CEO, both of whom come from Celcom.
The companies aim to reach a final agreement in the second quarter of 2021 following due diligence. The transaction remains subject to approval by the Digi board and Celcom shareholders, receipt of regulatory approvals and other customary terms and conditions.
Telenor and Axiata previously attempted a merger of all of their Asian operations. However, after several months of negotiations in 2019, they were unable to reach a final agreement.
