Axiata Group and Telenor Group agreed to merge their Malaysian operations Celcom and Digi after concluding a due-diligence exercise, with the proposed tie-up valued at an estimated MYR50 billion ($12.05 billion) and expected to be completed by the second quarter of 2022.

The companies jointly stated the agreement involves each taking a 33.1 per cent ownership stake in the merged company, which will continue to be listed on the Malaysian stock exchange and be named Celcom Digi. The transaction is subject to approval of Axiata and Digi shareholders, regulatory approvals and other customary terms and conditions.

Telenor and Axiata asserted the merger would establish a “commercially stronger and more resilient digital converged service provider, and leading Malaysian telecom operator positioned to drive Malaysia’s digital ambitions”.

In early April, Axiata and Telenor announced they were in advanced discussions on a proposed merger of the two operators, which have a combined subscriber base of about 19 million.

The companies said the integration planning phase will include detailed work on potential cost savings, with initial estimates indicating value accretion through cost and capex synergies of around MYR8 billion. The new company will also aim to invest MYR250 million over five years to build a world-class innovation centre in Kuala Lumpur.

Value boost
Axiata Group president and CEO Izzaddin Idris 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.”

Jorgen Rostrup, head of Asia for Telenor, said: “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.”

The companies previously agreed to nominate Idris as chair of the combined company, Rostrup as deputy chair, Celcom chief Idham Nawawi as CEO and Digi CEO Albern Murty as deputy chief.