Telenor Group and Axiata ink Malaysian merger agreements

21 Jun 2021

Axiata Group, Telenor Asia and Digi.Com have announced the successful conclusion of a due-diligence exercise, following which they have now signed transaction agreements for the proposed merger of their Malaysian businesses, Celcom Axiata and Digi (together ‘MergeCo’).

Following the 8 April 2021 announcement that Axiata and Telenor were in advanced discussions on the proposed merger, in confirming the signing of the transaction deals the companies claimed the development ‘signifies a confirmation of the intent to establish a commercially stronger and more resilient digital converged service provider, and leading Malaysian telecom operator positioned to drive Malaysia’s digital ambitions’.

Outlining the plans for the merger, it was noted that on a pro forma basis MergeCo will serve an estimated 19 million customers with revenue of MYR12.4 billion (USD2.9 billion), EBITDA of MYR5.7 billion, net profit of MYR19.9 billion and free cash flow of MYR4.0 billion. Axiata and Telenor will be equal partners in the enlarged company, with each taking a 33.1% ownership stake each in MergeCo, which will be listed on Bursa Malaysia Securities Berhad. Upon completion of the merger, Axiata will receive newly issued ordinary shares in Digi, representing 33.1% of the enlarged issued share capital of Digi, cash consideration of MYR2.0 billion of which approximately MYR1.7 billion will come from Digi as debt in MergeCo and approximately MYR300 million from Telenor as part of an ownership equalisation – under the terms of the proposed merger. Completion of the transaction will be subject to the approval of both Axiata and Digi shareholders, all necessary regulatory approvals and other customary terms and conditions, and barring ‘unforeseen circumstances’, should be completed by the second quarter of 2022.

Commenting, Dato’ Izzaddin Idris, President & Group CEO of Axiata said: ‘We are charting good progress in the ongoing merger exercise with Telenor and Digi and remain aligned in our intentions to deliver a strong value proposition that will enable our customers to participate more confidently as the nation transitions towards a digital economy.’ Meanwhile, Jorgen A Rostrup, Executive Vice President and Head of Asia in Telenor Group, added: ‘We look forward to partner with Axiata to realise the potential of the proposed merged company … With this merger we bring together competencies, financial strength and scale to go beyond connectivity and implement technology that further advances our customers digital experience.’

Malaysia, Axiata, Celcom Axiata, Digi Telecommunications, Telenor Group