Digi, Celcom Axiata get green light for merger in Malaysia

Digi.com and the Axiata Group have received the green light for the proposed merger of their telco operations, which paves the way for the combined entity to overtake Maxis and become Malaysia’s largest mobile service operator by revenue.

The Malaysian Communications and Multimedia Commission gave the clearance on Wednesday (Jun 29), nearly a year after the merger was first tabled.

In a joint statement, Axiata Group and Digi announced that they have received a notice of no-objection from the commisison to proceed with the merger of Celcom Axiata and Digi, to form Celcom Digi Bhd. Axiata is the parent company of Celcom Axiata, while Digi’s majority shareholder is Norway’s Telenor, which owns 49 per cent.

The merger is expected to be completed within the second half of 2022, after it gets approval from the Securities Commission, Bursa Malaysia and shareholders.

Once done, Axiata and Telenor will have an equal stake of 33.1 per cent each in Celcom Digi Bhd, which will continue to be listed on Malaysia’s stock exchange.

When the merger was announced last year, it was estimated that the entity would have annual revenue of around US$3 billion and core profitability of US$1.4 billion, from a subscriber base of about 19 million customers. 

For the first quarter ended March 31, Maxis recorded RM2.41 billion (S$760 million) in revenue, while Celcom and Digi recorded revenue of RM1.66 billion and RM1.52 billion respectively.

Digi currently has the largest base with 10.24 million subscribers, while Celcom’s 9.58 million subscribers is just slightly more than the 9.52 million currently with Maxis.

RHB Investment bank analyst Jeffrey Tan said the market capitalisation of Celcom Digi is expected to reach RM56 billion after the merger is completed.

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“Based on initial estimates, Axiata and Telenor have guided for synergies to the tune of RM8 billion, an amount which appears to be ahead of our and market estimates of RM5 billion to RM7 billion. This would largely come from network, marketing and distribution, and other savings on operating expenses,” he said in a June 22 report.

In the joint statement by Celcom and Digi, both noted that the merger will help realise the potential of both companies to provide better network quality and coverage to support growing demand for data and digitalisation. The merged entity will also invest up to RM250 million over 5 years to build an innovation centre in Kuala Lumpur.