PETALING JAYA: Axiata Group Bhd. and Norway’s Telenor ASA signed a definitive agreement to combine their Malaysian mobile operations in what is the biggest telecom transaction in the country.
Axiata will transfer its stake in Celcom Axiata Bhd. to Digi.com Bhd. for RM17.8 billion, according to a filing today. In return, it will get new shares and RM1.7 billion in cash from Digi, and close to RM300 million from Telenor. The merged entity will have a “pre-synergy equity value” of close to RM 50 billion.
A formal agreement, first reported by Bloomberg News, comes after Axiata and Telenor announced in April that they were in advanced discussions to merge Celcom and Digi that could create Malaysia’s biggest cellphone operator by subscribers.
The merger will also become the nation’s largest telecom deal on record, surpassing Binariang GSM Bhd.‘s 2007 acquisition of Maxis Communications Bhd. in a RM41 billion deal, according to data compiled by Bloomberg.
Axiata and Telenor will have an equal ownership of 33.1% each in the merged entity to be known as Celcom Digi Bhd., which will have a subscriber base of 19 million and pro-forma revenue of RM12.4 billion. The combination may result in cost and capex synergies of about RM8 billion on a net present value basis, according to the filing.
Celcom Digi will also invest RM250 million over five years in building an innovation centre in Kuala Lumpur, according to the statement.
Shares in Axiata fell 1.5% at the midday break in Kuala Lumpur after losing as much as 4.2% earlier. Digi.com shares climbed 3.1%.