Celcom & Digi To Merge But Will Continue As Separate Brands

Word on the street has it that both Axiata Group Bhd and Digi.com Bhd are set to build the biggest Malaysian service provider together.

Within the mobile service industry, there is a need for large capital expenditure. Since the high-growth era is gone, analysts stated that mergers are a logical step to bring financial benefits and achieve better economies of scale. Therefore, this could be an advantage for both companies.

Just this morning (Thursday, 8th April), the share trading for both Axiata and Digi was suspended, pending an announcement. This suspension fuelled speculations in the market as both Axiata and Digi’s parent, Telenor, were previously negotiating about merging their operations in Asia but failed.

According to separate filings with the stock exchange, the companies stated that all structured warrants associated with Digi would be suspended together as well.

Previously, Axiata and Telenor formed a mega-merger plan in May 2019 where they attempted to create one of the biggest telecommunications groups that would expand to over one billion individuals in nine countries. Originally, the plan was to combine a merged entity with Telenor holding 56.3% and Axiata with just 43.5%. However, as mentioned before, the merger was canceled a few months later.

Additionally, analysts have mentioned that mega-mergers of regional operations are much more convoluted because regulatory approvals are a requirement.

Update (8th April, 3:40pm):

This afternoon, Axiata held a briefing, where both the company and Telenor Asia officially confirmed that they’re currently planning to merge Celcom and Digi into a singular entity. The recent joint announcement has established the speculations started by the suspension of Axiata and Digi share trading that happened earlier this morning.

According to Axiata, the merger will ensure that both parties have equal equity, with Axiata and Telenor owning 33.1% each. In addition, Axiata and other Malaysian institutional funds will own over 51% of the merged entity altogether.

The brand name is yet to be revealed. However, the merged company will be officially named Celcom Digi Berhad. Idham Nawawi, the current CEO of Celcom, has been selected as the CEO of the merged company. Meanwhile, Digi’s CEO, Albern Murty, will become the company’s Deputy CEO.

Bursa Malaysia will have Celcom Digi Berhad written on its list. Moreover, both individual companies stated that no retrenchment will be forced for any existing employees. Meanwhile, Celcom and Digi will operate “as is” to ensure customers will stay on their chosen mobile operators between the two.

Last but not least, Axiata and Telenor have informed that a new Innovation Centre will help advance 4IR digital transformation, 5G development, and much more.

Source: The Edge Markets, Lowyat.

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