Merger won’t create monopoly

Celcom and Digi consolidation may not lead to price cuts, says AmInvestment Bank Research.

PETALING JAYA: Axiata Group Bhd president and group CEO Tan Sri Jamaludin Ibrahim has played down concerns that the possible merger between Celcom Axiata Bhd and Bhd would create a new monopoly in the country.

It is estimated that the combined entity will have a 35% market share in the local telecommunications industry.

“This is a converged industry, with mobile going into fixed line and fixed line going into mobile. From that point of view, we make up only one-third of the mobile business pie,” he said at a briefing.

He also said that the combined entity would only be a small player when compared to global players like Facebook and Whatsapp. It is estimated that more than 50% of voice calls made across the country are not on mobile lines and 70% of data is not related to mobile networks.

As part of the proposed merger of Axiata and Telenor ASA’s Asian operations, Celcom and Digi will also merge and be the local leader in terms of total revenue and earnings before interest, tax, depreciation and amortisation (EBITDA), as well as customer base.

The Malaysian telco entity will have a pro forma revenue of an estimated RM14bil and EBITDA of about RM5bil annually.

This is supported by the combined customer base of 21 million.

The merged entity will allow greater cost savings and reduced capital expenditure, as well as the ability to scale in terms of providing better products and services to consumers.

Consumers will also stand to benefit from greater quality and coverage by the merged entity.

“With one big network, there would definitely be a lot more efficiencies in scale and synergy.

“We are not going to guarantee that prices would go down, as we have not arrived at that point of discussions (negotiations are still preliminary) but at least, as a combined company, we can offer affordable pricing.

“We have yet to define this (affordable pricing) but it would definitely be better than what we can do individually.

“There is no way a telco can lower its prices without sacrificing quality and coverage – something else will be sacrificed,” said Jamaludin, adding that price is not the only customer proposition.

Additionally, Digi will remain listed on the Main Market of Bursa Malaysia, while Celcom will be listed by virtue of being merged with Digi. Both Axiata and Telenor have yet to decide on the new brand name for the merged mobile network.

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Celcom , Digi , Jamaludin , merger , monopoly , telecoms , industry ,


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