Axiata Group Berhad (“Axiata”) and Telenor Asia (“Telenor”) (together “Parties”) are in advanced discussions on the merger of the telco operations of Celcom Axiata Berhad (“Celcom”) and Digi.com Berhad (“Digi”) (“MergeCo”), in which the Parties will have equal ownership estimated at 33.1 percent 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 percent 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.
In face of the global Covid-19 pandemic accelerating the shift towards digitalisation, the Government’s announcement of the MyDIGITAL blueprint sets the pathway for economic transformation that strategically positions the nation to be highly competitive in the new norm.
Where connectivity is a critical digitalisation enabler, the telco industry will play an integral role in supporting the Government’s decision to fast-track 5G services and deliver ubiquitous high-quality broadband speed and services. This will bode well for customers as a move that would reap benefits for the economy and industry. As such, MergeCo will be uniquely positioned to take advantage of opportunities that come with technological advancements and the surge in the adoption of digital services while in parallel, manage the evolving challenges of a highly competitive and complex environment.
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.
With national interests firmly in place, Axiata and key Malaysian institutional shareholders will own more than 51 percent of MergeCo. Axiata has the right to nominate the initial Chairman and Chief Executive Officer of MergeCo, and together with Telenor, have agreed to nominate the following individuals to the key positions:
- Chairman – Dato’ Izzaddin Idris
- Vice Chairman – Jørgen C. Arentz Rostrup
- Chief Executive Officer – Idham Nawawi
- Deputy Chief Executive Officer – Albern Murty
MergeCo will be named as Celcom Digi Berhad 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.