Telenor Group and Axiata Group Berhad are in advanced discussions about a potential merger of their Malaysian mobile operations Digi and Celcom, Telenor said yesterday.
The merged company will be named Celcom Digi Berhad, the Norwegian company said in a press release.
"Telenor and Axiata will work towards finalising agreements in relation to the proposed transaction within the second quarter of 2021 following due diligence," it added.
Both parties will have an equal ownership of 33.1 per cent each in the new company, which is expected to be a leading provider of telecommunication services in the Southeast Asian country, with competence and scale to meet increasing expectations and demand from a digitally connected society.
The parties aim to create a leading telecommunication service provider in Malaysia with the capabilities to drive research and innovation and facilitate a platform for accelerated digital growth in the local ecosystem.
A progressive digital economy is important to Malaysia's future economic resilience and competitiveness, and the merged company will be well-positioned for delivering industry innovation, high-quality connectivity and a diversified value proposition to the customers, Telenor said.
"The proposed merger represents an important milestone in Telenor Group's strategy to strengthen its Asian presence and create value in the region," said Jørgen C Arentz Rostrup, executive vice-president and head of Telenor Asia.
"The new entity will have the size and financial capabilities to support Malaysia's digital aspirations and lead industry development in a connected society. We look forward to partnering with Axiata to realise the potential of the new company."
Both parties have agreed to nominate Dato' Izzaddin Idris as chair, Rostrup as deputy chair, Idham Nawawi as CEO and Albern Murty as deputy CEO of the merged company.
As a part of the transaction, Axiata will receive newly issued shares in Digi.
Celcom Digi will continue to be listed on Bursa Malaysia, a stock exchange in the country, and will be amongst the top stocks in terms of market capitalisation and contribute to the attractiveness of the local capital market.
The transaction will be subject to approval by Digi Board and Celcom shareholders, receipt of regulatory approvals and other customary terms and conditions.
The parties acknowledge that there is no certainty that these discussions will result in any agreement, the press release added.
Telenor Group owns a 55.6 per cent stake in Grameenphone, the largest mobile phone operator in Bangladesh, while Axiata holds a 61.82 per cent stake in Robi, the second-largest carrier.