Axiata, Telenor in advanced talks to merge Malaysian operations

[SINGAPORE] Malaysian telecoms firm Axiata Group and Norway's Telenor ASA are in advanced discussions to merge their Malaysian mobile operations, the firms said on Thursday.

Both companies said they were discussing the merger of the telco operations of Celcom Axiata Berhad and Digi.Com, in which the parties would have equal ownership estimated at 33.1 per cent each.

Malaysian institutional investors would own at least 17.9 per cent of the shares in the new company, ensuring that the overall local ownership exceeded 51 per cent, Axiata said.

The company would be called Celcom Digi.

Reuters reported earlier on Thursday that Axiata and Telenor were set to announce a deal involving the Malaysian mobile operations of both firms.

As part of the transaction, Axiata would receive newly issued shares in Digi, a cash consideration from new debt in the merged company of about US$400 million and a further US$70 million from Telenor Group, Telenor said.

"A transaction will realise synergies and provide value for shareholders in line with our strategy of further developing Telenor's Asian portfolio," Telenor said in a statement.

The Norwegian company, which is the largest shareholder in Digi, has other Asian operations in Thailand, Bangladesh, Myanmar and Pakistan.

Axiata said the merged company aimed to be "a leading telecommunications service provider in Malaysia in terms of value, revenue and profit", and was expected to have proforma revenue of about RM12.4 billion (S$4.02 billion).

It was expected to have earnings before interest, taxes, depreciation and amortisation of about RM5.7 billion, and an estimated 19 million customers.

Trading in shares of Digi and Axiata was suspended earlier in the day pending the announcement.

In September 2019, Telenor and Axiata called off a proposed deal to create a telecoms joint venture with nearly 300 million customers across South and South-east Asia, blaming "complexities".

And last year Telenor said it was combining its Asian operations into a single entity under new leadership to be better placed to pursue deals in the region.

Digi is Malaysia's second largest mobile services provider by subscribers, while Axiata's domestic unit Celcom, is the third largest, in a sector facing intense competition.

REUTERS