Telenor To Merge Asian Operations With Axiata, Sees USD 5 Billion In Synergies

Telenor Group and Axiata Group announced talks on a potential non-cash merger of their telecom and infrastructure assets in Asia, in which Telenor would take a majority stake. The MergeCo would have its HQ in Malaysia and would serve nearly 300 million customers using approximately 60,000 towers in nine countries in Asia.

Billed as a ‘merger of equals’, the plan is for Telenor to own 56.5 percent of the merged company, based on equity value, with Axiata holding 43.5 percent. This is preliminary and is subject to adjustments and due diligence, with no certainty that the talks will result in any transaction agreement.

The parties said they aim to create a leading, well diversified, Pan-Asian telecoms company with operations in nine countries with a total population of almost 1 billion. MergeCo would have nearly 300 million customers and become one of Asia’s largest mobile infrastructure companies, operating approximately 60,000 towers throughout Asia.

Malaysia base

MergeCo would have its operational headquarters in Kuala Lumpur housing the majority of functions, and would 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. Robi in Bangladesh, which is jointly owned by Axiata with Airtel, would continue separately and independently managed by Axiata.

By uniting two organisations with complementary footprints and a “merger of equals spirit”, there will be opportunities to benefit from synergies estimated at around USD 5 billion or NOK 43 billion. This would also support future investments and create shareholder value, the companies said. MergeCo would take an active role in accelerating technological modernisation and digitisation in Malaysia and throughout Asia, and plans to establish the Malaysian Research and Innovation Centre for developments such as 5G, Internet of Things (IoT) and artificial intelligence.

Q3 closing

Telenor and Axiata said they 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, regulatory approvals and other customary terms and conditions.

Telenor’s Asian footprint covers Thailand (Dtac), Malaysia (Digi), Bangladesh, Pakistan and Myanmar. Axiata has operating companies in Malaysia (Celcom), Bangladesh (Robi), Cambodia (Smart), Nepal (Ncell), Sri Lanka (Dialog) and Indonesia (XL), and the tower business Edotco.

Pro-forma revenue and pre-synergy EBITDA of MergeCo is approximately USD 13 billion (around NOK 113 billion) and USD 5.5 billion (around NOK 48 billion).―Telecompaper