Axiata and Telenor in talks to merge Celcom and Digi

Axiata Group and Telenor Asia are in advanced discussions on the merger of their Malaysian telco operations of Celcom Axiata and Digi, with both parties having an equal ownership of about 33.1% each. MergeCo will be named Celcom Digi, and Axiata and key Malaysian institutional shareholders will own more than 51% of the new entity. The proposed transaction will be finalised in the second quarter of 2021.

With the intent to create the leading Malaysian telco, MergeCo will bring together the combined scale, competencies, finances and vast experiences. This is in an effort 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.

Axiata and Telenor have nominated the following individuals to the key positions: Izzaddin Idris as chairman; Jørgen C. Arentz Rostrup as vice chairman; Idham Nawawi as CEO; and Albern Murty as deputy CEO.

Both parties also reiterated 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. Axiata's spokesperson told A+M that it is too premature at this juncture to comment on further details concerning leadership changes in the marketing teams.

On the consumer front, the press statement explained that customers will benefit from the merger as the new entity 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.

With the merger, the press statement said 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 approximately RM5.7 billion, and an estimated 19 million customers.

Axiata and Telenor have also agreed to the creation of an Innovation Centre to catalyse 4IR digital transformation, development of 5G use cases and other technological advancement. The Innovation Centre aims to not only drive technological advancement in Malaysia, but also play a direct role in upskilling employees for the future economy. 

Chairman of Axiata Board Ghazzali Sheikh Abdul Khalid said the new entity will be positioned to compete amidst uncertainties and challenges in the post-pandemic world. Meanwhile, Axiata's president and group CEO Izzaddin Idris said the team is confident that Celcom Digi will have the capacity to invest and enable the realisation of Malaysia's MyDIGITAL plan.

"As a commercially stronger and more resilient entity, Celcom Digi will help restore long-term growth and capacity to the industry, especially in terms of improved profitability. We will be well placed to further invest in research and innovation, and to improve our customer experience," he said.

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