Axiata, Telenor to create new Southeast Asian telecom giant

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Axiata to merge Asian business with Telenor

The two telecom companies Axiata from Malaysia and Telenor from Norway are planning to create  a new jointly-owned Asian telecom company with close to 300 million customers in a push to cut costs and boost growth, the firms announced on May 6.

The merged business would combine the two companies’’ South Asian and Southeast Asian operations and will likely be owned 56.5 per cent by the Norwegian mobile operator and 43.5 per cent by Axiata, they said.

“With its unique portfolio, the merged company will be one of the largest telecommunications groups in the region in terms of value, revenue and profit and have a strengthened balance sheet to support aggressive growth and expansion,” Axiata said.

No cash would change hands as part of the merger, the companies added.

The joint firm will have operations in ten countries with a total population of close to one billion people, including Thailand (DTAC), Malaysia (DiGi, Celcom), Bangladesh (Grameenphone, Robi), Pakistan (Telenor Pakistan), Myanmar (Telenor Myanmar), Cambodia (Smart), Indonesia (XL Axiata), India (Idea) Sri Lanka (Dialog) and Nepal (NCell).

The annual pro-forma revenue for the jointly owned company is estimated to be $13 billion, with earnings before interest, tax, depreciation and amortisation (EBITDA) of $5.5 billion before any savings are realised.

The companies expect the combined group to generate savings of around $5 billion, but did not provide a breakdown of where those would come from. The two have overlapping businesses in several countries, including Malaysia, where they would merge Celcom and DiGi, their respective units, under the new umbrella.

An analyst said the plan made sense, but could run into regulatory hurdles tied to strategic security issues.

“Overall, we would be positive if this deal materialises as this could reduce the number of competitors, effectively enabling the merged entity to leapfrog to top positions in terms of market share in countries which are involved in the merger,” Alex Goh, an analyst at AmInvestment Bank, told Reuters.

The holding company will be listed on an international stock exchange, as well as on Bursa Malaysia, the companies said.

“I am confident this will create significant value for shareholders and will be beneficial to our customers,” Telenor chief executive Sigve Brekke said in a statement.

The companies aim to complete the deal in the third quarter of this year.

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Axiata to merge Asian business with Telenor The two telecom companies Axiata from Malaysia and Telenor from Norway are planning to create  a new jointly-owned Asian telecom company with close to 300 million customers in a push to cut costs and boost growth, the firms announced on May 6. The merged business would combine the two companies’' South Asian and Southeast Asian operations and will likely be owned 56.5 per cent by the Norwegian mobile operator and 43.5 per cent by Axiata, they said. “With its unique portfolio, the merged company will be one of the largest telecommunications groups in...

Reading Time: 2 minutes

Auto Draft
Axiata to merge Asian business with Telenor

The two telecom companies Axiata from Malaysia and Telenor from Norway are planning to create  a new jointly-owned Asian telecom company with close to 300 million customers in a push to cut costs and boost growth, the firms announced on May 6.

The merged business would combine the two companies’’ South Asian and Southeast Asian operations and will likely be owned 56.5 per cent by the Norwegian mobile operator and 43.5 per cent by Axiata, they said.

“With its unique portfolio, the merged company will be one of the largest telecommunications groups in the region in terms of value, revenue and profit and have a strengthened balance sheet to support aggressive growth and expansion,” Axiata said.

No cash would change hands as part of the merger, the companies added.

The joint firm will have operations in ten countries with a total population of close to one billion people, including Thailand (DTAC), Malaysia (DiGi, Celcom), Bangladesh (Grameenphone, Robi), Pakistan (Telenor Pakistan), Myanmar (Telenor Myanmar), Cambodia (Smart), Indonesia (XL Axiata), India (Idea) Sri Lanka (Dialog) and Nepal (NCell).

The annual pro-forma revenue for the jointly owned company is estimated to be $13 billion, with earnings before interest, tax, depreciation and amortisation (EBITDA) of $5.5 billion before any savings are realised.

The companies expect the combined group to generate savings of around $5 billion, but did not provide a breakdown of where those would come from. The two have overlapping businesses in several countries, including Malaysia, where they would merge Celcom and DiGi, their respective units, under the new umbrella.

An analyst said the plan made sense, but could run into regulatory hurdles tied to strategic security issues.

“Overall, we would be positive if this deal materialises as this could reduce the number of competitors, effectively enabling the merged entity to leapfrog to top positions in terms of market share in countries which are involved in the merger,” Alex Goh, an analyst at AmInvestment Bank, told Reuters.

The holding company will be listed on an international stock exchange, as well as on Bursa Malaysia, the companies said.

“I am confident this will create significant value for shareholders and will be beneficial to our customers,” Telenor chief executive Sigve Brekke said in a statement.

The companies aim to complete the deal in the third quarter of this year.

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