Telenor Group and Axiata Group are in advanced discussions to merge the telco operations of Celcom and Digi (MergeCo) with both Groups having equal ownership of 33.1 percent each.
Axiata together with Malaysian institutional funds will own over 51 percent of the MergeCo.
As part of the transaction, Axiata will receive newly issued shares in Digi representing 33.1 percent post-transaction shareholding and cash equalisation amount of around RM2 billion, of which RM1.7 billion to come from Digi as new debt, balance of RM300 million from Telenor.
MergeCo will be considered a leading telecommunications service provider in Malaysia in terms of value, revenue and profit, with proforma revenue of about RM12.4 billion, pre-synergy EBITDA of the combined entity at approximately RM5.7 billion, and an estimated 19 million customers.
Both parties have agreed to nominate Dato’ Izzaddin Idris as Chairman, Jørgen C. Arentz Rostrup as Vice Chairman, Idham Nawawi as Chief Executive Officer and Albern Murty as Deputy Chief Executive Officer.
MergeCo will be named as Celcom Digi Berhad and will continue to be listed on Bursa Malaysia. The merger is expected to improve the liquidity and profile of Bursa Malaysia as one of the largest technology company in Malaysia and amongst the largest market capitalisation companies of the Exchange.
“The joint creation of a true Malaysian Champion, this merger of Celcom and Digi will see the coming together of the largest mobile operator with the firepower to trigger tremendous opportunities in helping Malaysia leapfrog into the Fourth Industrial Revolution and fulfil our vision of a digitised nation,” Chairman of the Axiata Board, Tan Sri Ghazzali Sheikh Abdul Khalid said.
Axiata’s President & Group Chief Executive Officer, Dato’ Izzaddin Idris, said: “It is no secret that the telecommunications industry continues to face long-term structural headwinds of slower growth, increased operating costs and lower profits. On one hand, we see prices of products and services continue to slide while capital expenditure especially on network, quality coverage and advanced technology continue to rise.
Axiata’s President & Group Chief Executive Officer, Dato’ Izzaddin Idris, said, “It is no secret that the telecommunications industry continues to face long-term structural headwinds of slower growth, increased operating costs and lower profits. On one hand, we see prices of products and services continue to slide while capital expenditure especially on network, quality coverage and advanced technology continue to rise.””
“Against that, data traffic has doubled every year pre-Covid and expected to accelerate even faster in the new norm. Digital aspirations and the ever-increasing demand for connectivity call for significant investments. In order to stay ahead of the curve, we must strengthen the foundation to offer continuous high quality broadband, improve 4G connectivity and subsequently, support the acceleration of 5G rollout,” he added.
