Axiata Group Bhd and Telenor Asia, the major shareholders of Digi.com Bhd, are proposing the merger which will see Axiata, together with Malaysian institutional funds, owning over 51% in the company.
However, customers will be able to maintain their choice of mobile operator brand, as both the Celcom and Digi brands will continue even after the merger.
In a statement today, Axiata said that as part of the merger transaction, the company would receive newly issued shares in Digi, representing 33.1% post-transaction shareholding and cash equalisation of around RM2 billion, of which RM1.7 billion would come from Digi as new debt while the balance of RM300 million will come from Telenor.
“Both parties will work towards finalising agreements in relation to the proposed transaction within the second quarter of 2021.
“The transaction will be subject to approval by Celcom and Digi shareholders, receipt of regulatory approvals and other customary terms and conditions,” it said.
According to Axiata, the MergeCo will continue to be listed on Bursa Malaysia, and will be one of the largest technology companies in Malaysia with among the largest market capitalisations in the exchange.
Axiata said MergeCo will be considered as a leading telecommunications service provider in Malaysia in terms of value, revenue and profit; with a proforma revenue of about RM12.4 billion, pre-synergy earnings before interest, taxes, depreciation, and amortisation (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% of MergeCo.
“Axiata has the right to nominate the initial chairman and chief executive officer (CEO) of MergeCo, and together with Telenor, we have agreed to nominate the following individuals to the key positions, namely chairman Izzaddin Idris, vice-chairman Jørgen C Arentz Rostrup, CEO Idham Nawawi and deputy CEO Albern Murty,” it said.
In terms of employees, it said both parties reiterated their commitment to protect their workers’ welfare with no forced retrenchments.
“MergeCo will create opportunities for staff to continue to develop across functions, build new competence and be part of the company’s future growth as it explores new technologies and innovation,” it said.
Axiata and Telenor have also agreed to the creation of a world-class Innovation Centre to catalyse the fourth industrial revolution (IR 4.0) digital transformation, development of 5G use cases and other technological advancement.
Axiata board chairman Ghazzali Sheikh Abdul Khalid said the merger will see the coming together of the nation’s largest mobile operators, with the firepower to trigger tremendous opportunities in helping Malaysia leapfrog into IR 4.0 and fulfil the digitised nation goal.
Izzaddin, who is Axiata president and group CEO, said MergeCo will help restore long-term growth and capacity to the industry, especially in terms of improved profitability.
“We will be well placed to further invest in research and innovation, and to improve our customer experience.
“All in all, the proposed merger of two excellent Malaysian brands will serve to make lives better for our customers, giving them more choices for digital needs and higher quality services and solutions,” he said.
In a separate statement, Digi said its board noted the proposal for the merger, and the exciting prospect of creating a Malaysian market leader through the proven capabilities of the two established companies and the strength of two international telecommunication leaders, Axiata and Telenor.
The chair of its board of directors, Haakon Bruaset Kjoel, said the merger underpins a shared vision to create value through product and market innovations and high-quality data connectivity to power Malaysia’s digital ambitions in the years to come.