Norway’s Telenor and Malaysia’s Axiata Group Berhad are in talks to merge their Asia operations to gain a bigger foothold in the region’s mobile phone market.
Telenor is looking to take a majority stake in the merged entity to be named MergeCo, the company said in a statement on Monday.
“It is anticipated that Telenor, based on equity value, will own 56.5 percent in MergeCo and Axiata will own 43.5 percent,” it said.
The deal will create a leading and well diversified Pan-Asian telco with operations in nine countries with a total population of close to one billion people.
However, Axiata’s mobile operations in Bangladesh, Robi, will continue to be separately and independently managed by Axiata.
The MergeCo will have close to 300 million customers and become one of Asia’s largest mobile infrastructure companies operating approximately 60,000 towers across Asia.
The combined entity 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.
Pro-forma revenue and pre-synergy earnings before interest, taxes, depreciation and amortisation of the combined entity is approximately $13 billion and $5.5 billion.
The agreement will also aim to merge Malaysia’s Celcom and Digi with MergeCo, according to the statement.
By uniting two strong organisations with complementary footprints and a merger of equals spirit, there will be attractive opportunities to capture substantial synergies preliminary estimated at around $5billion in total and support future investments and create shareholder value, said the statement.
The MergeCo 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, bdnews24.com reports.
“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,” said Gunn Wærsted, chair of Telenor Group.
President and Chief Executive Officer of the Group Sigve Brekke said, “I am confident this will create significant value for shareholders and will be beneficial to our customers.”
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.
Telenor’s Asian footprint includes Thailand, Malaysia, Bangladesh, Pakistan and Myanmar. Axiata has operating companies in Malaysia, Bangladesh, Cambodia, Nepal, Sri Lanka and Indonesia, and the tower business edotco.