Celcom, Digi to merge

TheStar Thu, Apr 08, 2021 01:53pm - 1 week ago

KUALA LUMPUR: Advanced discussions are underway to merge Celcom Axiata Bhd, a unit of Axiata Group Bhd, with Digi.com Bhd under a new joint entity named Celcom Digi Bhd.

Axiata said in a Thursday statement it is in advanced discussions with Digi's parent, Telenor Asia, to merge the operations of the two telco firms.

Following the merger, the parties will each have equal ownership of about 33.1% stake.

The joint shareholding of Axiata with Malaysian institutional funds will be over 51% of the merged company, thereby safeguarding the national interest, it added.

The company will continue to be listed on Bursa Malaysia as one of the largest technology companies in Malaysia with one of the largest market capitalisations on the exchange.

According to Axiata, the parties will work towards finalising agreements over the proposed transaction within the second quarter of this year following due diligence.

Among the terms of the transaction, Axiata will receive newly issued shares in Digi representing 33.1% post-transaction shareholding and cash equalisation of about RM2bil, of which RM1.7bil will come from Digi as new debt and the balance of RM300mil 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," said Axiata.

"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 RM5.7bil, and an estimated 19 million customers," it added.

Given the majority shareholding of Axiata and the Malaysian institutional shareholders, Axiata has the right to nominate the initial chairman and CEO of the merged company.

In agreement with Telenor, Axiata nominated Datuk Izzaddin Idris as chairman, Jorgen C Arentz Rostrup as vice chairman, Idham Nawawi as CEO and Albern Murty as deputy CEO.

Izzaddin, Axiata's president and group CEO, said the merger will help to overcome the structural headwinds faced by the telecommunications industry.

"In order to stay ahead of the curve, we must strengthen the foundation to offer continuous high-quality broadband, improve 4G connectivity and subsequently, support the acceleration of 5G rollout.

"We welcome the Government’s recent launch of MyDIGITAL and are confident that Celcom Digi Bhd will have the capacity to invest and enable the realisation of these aspirations.

"We now will have the scale and competencies to deliver a wider range of innovative digital solutions to the Retail, Corporate and Enterprise segments," he said.

Related Stocks

AXIATA 3.780
BURSA 8.510
DIGI 4.190


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