PETALING JAYA: Axiata Group Bhd and Telenor Asia are in advanced discussions on the merger of the telco operations of Celcom Axiata Bhd and Digi.com Bhd (MergeCo), in which the parties will have equal ownership estimated at 33.1% each.
Axiata together with Malaysian institutional funds will own over 51% of the MergeCo.
As part of the merger transaction, Axiata will receive newly issued shares in Digi representing 33.1% 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.
With the intent to create the leading Malaysian telco, MergeCo will bring together Axiata and Telenor’s Malaysian operations’ combined scale, competencies, finances and vast experiences to generate significant synergistic value for a commercially stronger and more resilient MergeCo, which will be better positioned to drive the country’s transition into a high income digital society.
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 RM5.7 billion, and an estimated 19 million customers.
Axiata has the right to nominate the initial chairman and CEO of MergeCo, and together with Telenor, have agreed to nominate Datuk Izzaddin Idris as chairman, Jørgen C. Arentz Rostrup as vice-chairman, Idham Nawawi as CEO and Albern Murty as deputy CEO.
MergeCo will be named as Celcom Digi Bhd and will continue to be listed on Bursa Malaysia. MergeCo 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 parties reiterate their commitment to protect employee welfare with no forced retrenchments. MergeCo will create opportunities for staff to continue to develop across functions, build new competence and be part of future growth of the company as it explores new technologies and innovation.
Customers on the other hand, will benefit significantly from the merger, as the merged company will have the capacity to invest even more to provide better quality of service and at competitive rates. Customers also will be able to maintain their choice of mobile operator brand, as both Celcom and Digi brands will continue as is post-merger.
Axiata and Telenor have also agreed to the creation of a world-class Innovation Centre to catalyse 4IR digital transformation, development of 5G use cases and other technological advancement. The Innovation Centre will not only drive technological advancement in Malaysia, but also play a direct role in upskilling employees for the future economy.
Both parties will work towards finalising agreements in relation to the proposed transaction within the second quarter of 2021 following due diligence.
The transaction will be subject to approval by Celcom and Digi shareholders, receipt of regulatory approvals and other customary terms and conditions. The parties acknowledge that there is no certainty that these discussions will result in any agreement.