KUALA LUMPUR: The Malaysian Communications and Multimedia Commission (MCMC) has formally received an application from Digi.com Bhd’s subsidiary, Digi Telecommunications Sdn Bhd, for the proposed merger of Celcom Axiata Bhd and Digi.Com’s mobile telecommunication network operations.
In a filing with Bursa Malaysia yesterday, Digi.Com said it has engaged with the MCMC to initiate the merger assessment process in accordance with the regulator’s guidelines on mergers and acquisitions.
“Digi wishes to inform that its subsidiary, Digi Telecom-munications’ merger application has been formally received by MCMC for its assessment in accordance with the guidelines.
“The completion of the proposed merger will be, among others, also subject to the approval of the Securities Commission and the shareholders of Axiata (Group Bhd) and Digi.Com.”
Celcom Axiata is a unit of Axiata Group.
In a separate filing with the local bourse, Axiata Group said it had been informed by Digi Telecom-munications about the engagement with the MCMC for the proposed merger assessment process.
“The completion of the proposed merger will be, among others, also subject to approval of the Securities Commission and the shareholders of Axiata and Digi.Com,” it said.
On April 8, 2021, it was announced that Celcom Axiata and Telenor’s 49% unit, Digi.Com, would create a merged unit to be known as Celcom Digi Bhd.
Following the completion of a due diligence exercise, Axiata, Telenor and Digi.Com announced on June 21 that they had signed transaction agreements for the merger.
The parties said the merged entity (MergeCo) will serve an estimated 19 million customers with revenue of RM12.4bil, earnings before interest, taxes, depreciation and amortisation of RM5.7bil, net profit of RM1.9bil and free cashflow of RM4bil.
“Axiata and Telenor will be equal partners with a 33.1% ownership stake each in MergeCo,” the parties said, adding that MergeCo will continue to be listed on Bursa Malaysia.
“Targeted to be among the five largest companies listed on Bursa Malaysia in terms of market capitalisation, MergeCo is valued at a combined pre-synergy equity value of close to RM50bil.”
The parties said the integration planning phase will include further detailed work on synergies and business plan of MergeCo, adding that initial estimates indicate potential value accretion through cost and capex synergies of around RM8bil on a net present value basis.
“MergeCo will see the combination of scale, experience, competencies and financial strength of both global telecom groups with the market knowledge of two well-established local companies,” the parties said.
According to the parties, the proposed merger is expected to be completed by the second quarter of 2022, subject to the relevant approvals.