Norway’s Telenor announced on Monday morning the signing of the agreement with Malaysia’s Axiata involving the merger of Telenor’s company Digi and Axiata’s company Celcom, media E24 reports.
The value of the new company is estimated at around NOK 100 billion and the parties confirmed on Monday that they will be sitting with 33.1 percent each in the merged company.
Subject to approval from the shareholders, the new company will be named Celcom Digi Berhad and it will be listed on the stock exchange in Malaysia and will be one of the five largest companies.
Telenor’s Asia CEO Jørgen C. Arentz Rostrup said in a press release, “We look forward to working with Axiata to realize the potential of the new company.” The telecom industry is at the beginning of an exciting digital shift, and new technology will change how we develop and deliver services for both the private and public sectors, he said.
Other large investors in Malaysia will also own a significant share and in total Axiata and local investors will be sitting on more than 51 percent of the new company.
As payment, Axiata will receive newly issued shares in Digi, NOK 3.4 billion through the new company raising loans and a cash payment directly from Telenor of around NOK 600 million.
Pro forma figures show that the merged company will have around 19 million customers, a gross operating profit of close to NOK 12 billion, and a profit after tax of around NOK 4 billion at current exchange rates. According to Telenor, the merger will have significant positive so-called synergy effects, estimated at around NOK 17 billion.
The transaction must be approved by the shareholders of Asiata and Digi and regulatory authorities. The companies expect that the merger will be completed by the second quarter of next year, provided that these approvals are in place.
The companies have agreed that Axiata CEO Dato Izzaddin Idris will be chairman of the company, while Jørgen C. Arentz Rostrup will be deputy chairman.