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Norway's Telenor in talks with Malaysia's Axiata to create Asian mobile giant
[KUALA LUMPUR] Norway’s Telenor and Axiata Group Bhd, Malaysia’s biggest wireless carrier, are in talks to combine their Asian telecommunication operations in a “mega merger of equals” to create a company with 300 million customers in nine countries.
The proposed transaction will form an entity with sales of about US$13 billion and earnings of about US$5.5 billion. Potential savings, or “synergies,” from the deal would amount to about US$5 billion, according to Telenor. Telenor shares rose almost 5 per cent in early trading in Oslo.
“We aim to create a leading and well-diversified pan-Asian telecom and infrastructure company with substantial synergy potential and strong regional operations,” said Gunn Waersted, the chair of Telenor.
The transaction would provide a stronger foothold for both companies, which have recently seen their ambitions checked in Asia. The combination would be the largest mobile operator in Malaysia, with the merger of Celcom Axiata Bhd and Telenor’s Digi.Com Bhd, and potentially form a global top five mobile infrastructure company.
Telenor also operates in Thailand, Bangladesh, Pakistan and Myanmar, while Axiata has business in Cambodia, Nepal, Sri Lanka and Indonesia. Axiata’s mobile operations in Bangladesh, Robi, aren’t part of the deal.
Based on the equity value, Telenor would own 56.5 per cent of the new company and Axiata the remainder. A final agreement is sought by the third quarter, but the companies said that there’s no certainty that the discussions will result in an accord. They would aim to eventually list the company on an international exchange and in Malaysia.
The deal would continue a transformation for Telenor, which has sold its eastern European businesses and purchased a mobile operator in Finland to focus more on its Nordic home region. Telenor in 2017 sold its unit in India after years of tough competition. Axiata has seen similar troubles, having to exit Singapore and seeing an expansion in Pakistan checked.