KUALA LUMPUR: Advanced discussions are underway to merge Celcom Axiata Bhd, a unit of Axiata Group Bhd
, with Digi.com Bhd under a new joint entity named Celcom Digi Bhd.
Axiata said in a Thursday statement it has plans with Digi's parent, Telenor Asia, to merge the operations of the two telco firms and are aiming to finalise agreements over the proposed transaction within the second quarter of this year following due diligence.
In the event of a successful merger, the parties will each have equal ownership of about 33.1% stake.
The joint shareholding of Axiata with Malaysian institutional funds will be over 51% of the merged company, thereby safeguarding the national interest, it added.
The company will continue to be listed on Bursa Malaysia as one of the largest technology companies in Malaysia with one of the largest market capitalisations on the exchange.
Among the terms of the transaction, Axiata will receive newly issued shares in Digi representing 33.1% post-transaction shareholding and cash equalisation of about RM2bil, of which RM1.7bil will come from Digi as new debt and the balance of RM300mil from Telenor.
"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 RM5.7bil, and an estimated 19 million customers," said Axiata.
Given the majority shareholding of Axiata and the Malaysian institutional shareholders, Axiata has the right to nominate the initial chairman and CEO of the merged company.
In agreement with Telenor, Axiata nominated Datuk Izzaddin Idris as chairman, Jorgen C Arentz Rostrup as vice chairman, Idham Nawawi as CEO and Albern Murty as deputy CEO.
Axiata and Telenor have also agreed to the creation of a world-class Innovation Centre to catalyse 4IR digital transformation, development of 5G use cases and other technological advancement.
They 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," said Axiata.
However, the parties said there was no certainty that the discussions would result in any agreement.
"As we face fierce competition from global internet-based services and content providers, our stronger strategic position will allow for better negotiation levers in how we choose to compete and cooperate," said Axiata chairman Tan Sri Ghazzali Sheikh Abdul Khalid.
Izzaddin, Axiata's president and group CEO, said the merger will help to overcome the structural headwinds faced by the telecommunications industry.
"In order to stay ahead of the curve, we must strengthen the foundation to offer continuous high-quality broadband, improve 4G connectivity and subsequently, support the acceleration of 5G rollout.
"We welcome the Government’s recent launch of MyDIGITAL and are confident that Celcom Digi Bhd will have the capacity to invest and enable the realisation of these aspirations," he said.
In a separate statement, Digi's chairman Haakon Bruaset Kjoel said the merger underpins a shared vision to create value through product and market innovation and high-quality data connectivity, to power Malaysia’s digital ambitions in the years to come.
Trading in shares of Axiata and Digi were suspended today pending the announcement. Axiata last traded yesterday at RM3.80 a share while Digi closed at RM3.75 a share.
, with Digi.com Bhd under a new joint entity named Celcom Digi Bhd.Axiata said in a Thursday statement it has plans with Digi's parent, Telenor Asia, to merge the operations of the two telco firms and are aiming to finalise agreements over the proposed transaction within the second quarter of this year following due diligence.
In the event of a successful merger, the parties will each have equal ownership of about 33.1% stake.
The joint shareholding of Axiata with Malaysian institutional funds will be over 51% of the merged company, thereby safeguarding the national interest, it added.
The company will continue to be listed on Bursa Malaysia as one of the largest technology companies in Malaysia with one of the largest market capitalisations on the exchange.
Among the terms of the transaction, Axiata will receive newly issued shares in Digi representing 33.1% post-transaction shareholding and cash equalisation of about RM2bil, of which RM1.7bil will come from Digi as new debt and the balance of RM300mil from Telenor.
"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 RM5.7bil, and an estimated 19 million customers," said Axiata.
Given the majority shareholding of Axiata and the Malaysian institutional shareholders, Axiata has the right to nominate the initial chairman and CEO of the merged company.
In agreement with Telenor, Axiata nominated Datuk Izzaddin Idris as chairman, Jorgen C Arentz Rostrup as vice chairman, Idham Nawawi as CEO and Albern Murty as deputy CEO.
Axiata and Telenor have also agreed to the creation of a world-class Innovation Centre to catalyse 4IR digital transformation, development of 5G use cases and other technological advancement.
They 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," said Axiata.
However, the parties said there was no certainty that the discussions would result in any agreement.
"As we face fierce competition from global internet-based services and content providers, our stronger strategic position will allow for better negotiation levers in how we choose to compete and cooperate," said Axiata chairman Tan Sri Ghazzali Sheikh Abdul Khalid.
Izzaddin, Axiata's president and group CEO, said the merger will help to overcome the structural headwinds faced by the telecommunications industry.
"In order to stay ahead of the curve, we must strengthen the foundation to offer continuous high-quality broadband, improve 4G connectivity and subsequently, support the acceleration of 5G rollout.
"We welcome the Government’s recent launch of MyDIGITAL and are confident that Celcom Digi Bhd will have the capacity to invest and enable the realisation of these aspirations," he said.
In a separate statement, Digi's chairman Haakon Bruaset Kjoel said the merger underpins a shared vision to create value through product and market innovation and high-quality data connectivity, to power Malaysia’s digital ambitions in the years to come.
Trading in shares of Axiata and Digi were suspended today pending the announcement. Axiata last traded yesterday at RM3.80 a share while Digi closed at RM3.75 a share.
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