AXIATA

2.690

-0.09 (-3.2%)

OTHERS Axiata and Telenor in Advanced Discussions to Merge Celcom and Digi

AXIATA GROUP BERHAD

Type Announcement
Subject OTHERS
Description
Axiata and Telenor in Advanced Discussions to Merge Celcom and Digi

Axiata Group Berhad (“Axiata”) wishes to announce that Axiata and Telenor Asia (“Telenor”) (together “Parties”) are in advanced discussions on the merger of the telco operations of Celcom Axiata Berhad (“Celcom”) and Digi.com Berhad (“Digi”) (“MergeCo”), in which the Parties will have equal ownership estimated at 33.1 percent each. Axiata together with Malaysian institutional funds will own over 51 percent of the MergeCo.

 

As part of the merger transaction, Axiata will receive newly issued shares in Digi representing 33.1 percent post-transaction shareholding and cash equalisation amount of around RM2 billion, of which RM1.7 billion to come from Digi as new debt, balance of RM300 million from Telenor.

 

With the intent to create the leading Malaysian Telco, MergeCo will bring together Axiata and Telenor’s Malaysian operations’ combined scale, competencies, finances and vast experiences to generate significant synergistic value for a commercially stronger and more resilient MergeCo, which will be better positioned to drive the country’s transition into a high-income digital society. 

 

In face of the global Covid-19 pandemic accelerating the shift towards digitalisation, the Government’s announcement of the MyDIGITAL blueprint sets the pathway for economic transformation that strategically positions the nation to be highly competitive in the new norm.

 

Where connectivity is a critical digitalisation enabler, the telco industry will play an integral role in supporting the Government’s decision to fast-track 5G services and deliver ubiquitous high-quality broadband speed and services. This will bode well for customers as a move that would reap benefits for the economy and industry. As such, MergeCo will be uniquely positioned to take advantage of opportunities that come with technological advancements and the surge in the adoption of digital services while in parallel, manage the evolving challenges of a highly competitive and complex environment.

 

MergeCo will be considered a leading telecommunications service provider in Malaysia in terms of value, revenue and profit, with proforma revenue of about RM12.4 billion, pre-synergy EBITDA of the combined entity at approximately RM5.7 billion, and an estimated 19 million customers.

 

With national interests firmly in place, Axiata and key Malaysian institutional shareholders will own more than 51 percent of MergeCo. Axiata has the right to nominate the initial Chairman and Chief Executive Officer of MergeCo, and together with Telenor, have agreed to nominate the following individuals to the key positions:

Chairman – Dato’ Izzaddin Idris

Vice Chairman – Jørgen C. Arentz Rostrup

Chief Executive Officer – Idham Nawawi

Deputy Chief Executive Officer – Albern Murty

 

MergeCo will be named as Celcom Digi Berhad and will continue to be listed on Bursa Malaysia. MergeCo is expected to improve the liquidity and profile of Bursa Malaysia as one of the largest technology company in Malaysia and amongst the largest market capitalisation companies of the Exchange.

 

Employees are key assets and to address concerns of job security and employment, the Parties reiterate their commitment to protect employee welfare with no forced retrenchments. MergeCo will create opportunities for staff to continue to develop across functions, build new competence and be part of future growth of the company as it explores new technologies and innovation.

 

Customers on the other hand, will benefit significantly from the merger, as the merged company will have the capacity to invest even more to provide better quality of service and at competitive rates. Customers also will be able to maintain their choice of mobile operator brand, as both Celcom and Digi brands will continue as is post-merger.

 

Axiata and Telenor have also agreed to the creation of a world-class Innovation Centre to catalyze 4IR digital transformation, development of 5G use cases and other technological advancement. The Innovation Centre will not only drive technological advancement in Malaysia, but also play a direct role in upskilling employees for the future economy.

 

Both Parties will work towards finalizing agreements in relation to the proposed transaction within the second quarter of 2021 following due diligence.

 

The transaction will be subject to approval by Celcom and Digi 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.

 

Axiata will announce further material developments in relation to this matter as it materialises.

 

Attached herewith is the Media Release in relation to the above matter.

                       

This announcement is dated 8 April 2021.

 




Please refer attachment below.



Announcement Info

Company Name AXIATA GROUP BERHAD
Stock Name AXIATA
Date Announced 08 Apr 2021
Category General Announcement for PLC
Reference Number GA1-08042021-00010