Telenor and Axiata in talks to merge their Asian operations

Two telecom giants Telenor and Axiata Group Berhad are in discussion for a potential non-cash merger of their telecom and infrastructure assets in Asia (MergeCo),making it Asia’s largest mobile MergeCo. 
 

Post merger it is anticipated that Telenor, based on equity value, will own 56.5% in MergeCo and Axiata will own 43.5%, both parties acknowledging that this is preliminary subject to adjustments and due diligence.
 

While both the companies have their footprint in Malaysia, Bangladesh,Thailand . Axiata has a wider foothold in terms of geographical presence.
 

The proposed merger between two big telcos will take an active role in accelerating technology transformation and digitalisation in Malaysia and across Asia, and plans to establish the Malaysian Research and Innovation Centre for state-of-the-art technologies such as 5G, Internet of Things and Artificial Intelligence.
 

"Today we announce that Telenor and Axiata are in discussions on joining forces in Asia, one of the most dynamic and innovative regions in the world. Together, we aim to create a leading and well-diversified pan-Asian telecom and infrastructure company with substantial synergy potential and strong regional operations. It is Telenor's strategy to develop and create value from our core telco assets in the Nordic and Asian region. This potential merger is in line with that strategy, set by the Board and Management," said Gunn Wærsted, Chair of Telenor Group.
 

"By creating one of Asia's leading telecom players; with strong regional operations in nine countries and close to 300 million customers, we will combine scale and competence, thereby unlocking considerable synergies. I am confident this will create significant value for shareholders and will be beneficial to our customers," said Sigve Brekke, President and Chief Executive Officer of Telenor Group.
 

There is no certainty that these discussions will result in any transaction agreement between the parties.
 

With this merger they aim to enter Pan-Asian telco with operations in nine countries with a total population of close to one billion people.The MergeCo will have its operational headquarters in Kuala Lumpur with the majority of functions and is planned to be listed at an international stock exchange as well as on Bursa Malaysia. In Malaysia, the intention is to merge Celcom and Digi, with MergeCo as the majority owner in the combined business.
 

Telenor and Axiata will work towards finalising agreements in relation to the proposed transaction within the third quarter of 2019 following due diligence. The transaction will be subject to approval by shareholders, receipt of regulatory approvals and other customary terms and conditions.

Pro-forma revenue and pre-synergy EBITDA of the combined entity is approximately USD 13 billion (around NOK 113 billion) and USD 5.5 billion (around NOK 48 billion). Axiata's mobile operations in Bangladesh, Robi, will continue to be separately and independently managed by Axiata.