Axiata and Telenor seal $15 billion deal to form Malaysia’s biggest mobile operator

Malaysian telecoms firm Axiata Group Bhd and Norway’s Telenor ASA will merge their mobile operations in Malaysia in a $15 billion deal, forming a new market leader in the competitive Southeast Asian nation.

The companies had said in April they were in advanced talks to merge Celcom Axiata Bhd and DiGi.Com Bhd, and each party would own 33.1% of the combined firm.

The union of the country’s second and third largest mobile services providers will create a company estimated to have annual revenue of $3 billion, with core profitability of $1.4 billion from a subscriber base of about 19 million, Axiata and Telenor said in a joint statement.

The merged entity, Celcom Digi Bhd, has a “pre-synergy” equity value of nearly 50 billion ringgit ($12.1 billion), the companies said. It will remain listed in Kuala Lumpur, in line with a preliminary agreement announced in April.

Two sources familiar with the deal said the implied $15 billion enterprise value of the combined firm was based on Digi’s share price of 4.18 ringgit as of Friday. Digi’s shares rose 3.4% on Monday to take its valuation to $8.1 billion.

The deal comes at a time when mobile operators are facing pressure on profits in a challenging industry environment. Celcom Digi’s main competitor would be the current largest telecoms operator in the country, Maxis Bhd.

The transaction, subject to regulatory and other approvals, is expected to be completed by the second quarter of 2022.

As a result of the deal, the companies plan cost cuts and savings on capital expenditure with a net present value of about $2 billion, Telenor said in a statement.

Axiata said it entered into the agreement with Digi, where 100% equity interest of Celcom Axiata would be transferred to Digi for a total consideration of 17.76 billion ringgit ($4.3 billion).

Digi said the merger would result in Axiata receiving newly issued shares in Digi and a cash consideration of 1.7 billion ringgit from Digi as new debt in the merged company.

Axiata said last Tuesday it hoped to seal the merger within days or a week, having completed due diligence.

Morgan Stanley was the sole international advisor to Axiata on the deal, while Citi advised Telenor.


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