After a non-event with the announcement by Axiata and Digi on the meeting outcome with the regulator Malaysian Communication and Multimedia Commission, both parties have issued a statement stating the trading of their shares on the Stock Exchange will resume independently.
On Friday, Axiata and Digi both had their shares on KLSE halted from 9.00 am due to a pending material announcement scheduled to be announced on that day. This was later discovered that both parties were waiting for approval from MCMC on the proposed merger of Celcom and Digi. However, in a filing to Bursa at midnight, both network operators published the feedback and concerns given by MCMC that have been asked to be addressed and resubmitted to the regulator.
Surely none of the parties were expecting the matter to be delayed any longer as the top brass would have anticipated MCMC’s concerns much in advance and the Friday event could have been just a formality. Two large corporations with a total market capitalisation of over RM60 billion would not have requested their shares to be suspended for one whole day if they were not sure of the outcome. But looks like it was the case.
In its reply to the operators, MCMC listed 4 matters of concern that it felt needed answers before it could consider the merger. Although the concerns are valid and address competition-related issues, since the merger will result in a mega-telco engulfing the rest to become the biggest network operator in the country, the question is why not a single person in Digi and Axiata knew this was coming?
Perhaps, it was done and dusted when it was announced back in 2021 and the rest was just due diligence and paperwork, not realising the sentiment has shifted with the whole Digital Nasional Berhad fiasco and is now spilling over into the merger agreements.
After all, it was the Communication Minister who was against the monopoly of DNB controlling the 5G rollout in the country and questioned the rationale. Despite the matter having been resolved with telcos now owning 70% stake in the Government-owned entity, the details have to be ironed out or signed. The Celcom-Digi deals could also be constituted as a monopoly if the merger goes through, combined both telcos will command over 70% of mobile users in the country, a staggering figure indeed.
The sheer user base will give the merged entity a competitive edge over the rest, it will be able to dictate market pricing and 5G could become the main driver controlling the narrative.
As bizarre as it may seem, we have all been dragged through the DNB tug-of-war and its impact on the nation’s 5G aspiration (2 years behind now), so this on-off dilemma at Axiata and Digi could see more flip-flops before any final decision is ever made. Just grab some popcorn and have your 4G device ready!
