Axiata and Telenor sign $15bn Malaysian merger

Earlier this year it was announced that Axiata and Telenor were in discussions to combine their Malaysian mobile units, a move which would see the creation of a new mobile market leader.

 

Today, the two companies have confirmed that they have conducted their due diligence and signed the transaction agreements to merge Axiata’s Celcom and Telenor’s Digi.

 

Telenor and Axiata will reportedly be equal partners in the venture, each owning 33.1% of the combined firm. 

 

Key Malaysian institutional shareholders are expected to own more than 51 percent of the merged business upon completion, overcoming a major political hurdle that scuppered a previous merger attempt back in 2019.

 

The merger will give the new combined entity around 19 million customers, dwarfing the current market leader, Maxis, which has around 9.4 million subscribers.

 

The business will have an estimated annual revenue of around $3 billion, according to company statements, and will have a "pre-synergy" equity value of nearly $12.1 billion, implying a total enterprise value of around $15 billion according to sources.

 

The merging companies said that they were “uniquely positioned to address Malaysia’s increasing digital service adoption and expectations of better connectivity” and will seek to fuel digitalisation throughout Malaysia. 

 

As part of the merger, the companies pledge to invest up to around $60 million in the next five years to build a “world-class Innovation Center” in Kuala Lumpur, looking to focus on Industry 4.0 and digital transformation in the local ecosystem.

 

“We look forward to partner with Axiata to realize the potential of the proposed merged company. The telecom industry is at the beginning of an exciting digital shift, and new technologies are going to change how we develop and deliver services for both the private and public sector,” said says Jørgen A. Rostrup, Executive Vice President and Head of Asia in Telenor Group. “With this merger we bring together competencies, financial strength and scale to go beyond connectivity and implement technology that further advances our customers digital experience.” 

 

As always, the merger is subject to regulatory approval and is expected to be completed by the second quarter of 2022.