Axiata reasonably confident of Celcom-Digi merger approvals

KUALA LUMPUR: Axiata Group Bhd and Telenor Asia, the parent company of Digi.com Bhd, are "reasonably confident" of getting approvals for a merger between Celcom Axiata Bhd and Digi.

The approvals include regulatory as well as Celcom and Digi's shareholders' approvals.

Axiata president and group chief executive officer Datuk Izzaddin Idris said the sentiment is supported by the involvement of himself and Telenor Asia executive vice-president and head Jorgen C. Arentz Rostrup in the merger talks.

"That is the mandate or responsibility that shareholders of both companies are giving to us.

"It is also the mandate for us to ensure that the merger takes place as effectively and seamlessly as possible and gain market share at the same time," he told a press briefing today.

Axiata and Telenor Asia are proposing to merge Celcom and Digi to become Celcom Digi Bhd (MergeCo).

While emphasising the "lesson learnt" from previous merger negotiations which fell through in 2019, Izzaddin said Axiata is more focused on consolidating the businesses and transactions in Malaysia this time around.

"There were many hurdles that we could not cross that time, but from our perspective, this (current merger) is a much more focused transaction because it involves consolidation in Malaysia," he said.

He also said that Digital Nasional Bhd, the special purpose vehicle that will roll out the country's 5G network, had engaged telecommunications companies (telco), including Axiata and Digi, to discuss challenges and what needs to be done on the 5G network rollout.

"We have always been supportive of initiatives by the government, especially in the 5G rollout to ensure the country and consumers benefit from the programme," he said.

Izzaddin also stressed that no forced layoffs would be implemented should the merger be realised.

On the possibility of a merger between Axiata and Telenor's businesses in Bangladesh, he said it was impossible to do so as it would be deemed to be anti-competitive.

Describing that this is a good time for merger talks, Rostrup said Telenor was "not very concerned" about not having control in the proposed Celcom-Digi merger.

He said the company viewed partnerships as a necessary move to deal with the increasingly complex context in the telco industry.

"The 5G network technology is no longer only a connectivity game but a bigger and complex one with several elements such as digitalisation, Internet of Things and artificial intelligence falling at the same time.

"Hence, this is the good time for us to join forces," he said.

Rostrup also emphasised that Telenor would not exit Malaysia after the merger, in contrast, the company would put more efforts and energy into Malaysia.

"We are dedicated to Malaysia and Asia, in general," he said.

However, both Axiata and Telenor did not reveal the valuations of the MergeCo as the deal is still at a preliminary stage.

In a statement today, Axiata said as part of the merger transaction, the company would receive newly issued shares in Digi, representing 33.1 per cent post-transaction shareholding and cash equalisation amounting to about RM2 billion.

It said RM1.7 billion will come from Digi as new debt while the remaining balance of RM300 million will come from Telenor.

Axiata, together with Malaysian institutional funds, will own over 51 per cent of the company, it added.

-- BERNAMA