Deutsche Telekom seeks to disrupt Malaysian mobile merger

20 Mar 2003

Malaysian mobile operator Celcom is today expected to get clearance from its shareholders to push ahead with plans to buy out the mobile unit of national fixed line operator Telekom Malaysia and merge it with its own operations to become the nation’s largest cellular operator. The company said yesterday that it would seek shareholder approval to table a bid of around MYR1.7 billion for Telekom’s mobile assets. Should it get the green light Celcom will emerge from the deal with around 40% of the Malaysian mobile market, leap-frogging current market leader Maxis Communications in the process.

The merger between Celcom and Telekom’s mobile unit may be the first of several consolidatory moves by Malaysia’s five mobile operators in response to an announcement by the government last year that the size of the population did not warrant five competing companies. However the proposed deal has met with resistance from Deutsche Telekom which has asked Celcom to withdraw its merger proposal. The German operator, which owns 8% of the Malaysian cellco, has filed for international arbitration as it believes the valuation of Celcom under the merger is not in shareholders’ interest. It also claims that it has not been asked to give its consent for the merger, which is required for the deal to go through.

Malaysia