Ncell’s Parent Company Axiata Merges With Telenor In A $15 BN Deal

Malaysian telecom giant Axiata Merges With Telenor ASA to combine their Malaysian telecom operations. The merger makes the new entity Celcom DiGi Bhd the country’s largest telecom operator.

Ncell‘s Investor and Malaysian telecom firm Axiata Group Bhd and Norway’s Telenor ASA’s, respectively the country’s second and third largest telecom companies, have sealed a $15 billion deal to lead their telecom enterprise in Malaysia’s competitive telco business.

A Prosperous Deal For All

The news of their imminent merger had surfaced recently. Axiata CEO Izzadin Idris had said, “Both companies have concluded the due diligence process and will pen the agreement soon. The signing is a matter of days or a week”.

With the convergence of Malaysia’s two largest telecom operators, the merged company Celcom DiGi Bhd will bring in an estimated annual revenue of $3 billion, with core profitability of $1.4 billion from a subscriber base of about 19 million.

“Assuming a smooth transition, post integration period, we are expecting to see improvement in EBITDA and cashflow margins in the combined entity in step with our ongoing commitment to maximise dividend payout for our shareholders,” Idris, after the deal.

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Reciprocal Finances

Axiata says Celcom Axiata’s 100% equity interest would be transferred to DiGi for a total of $4.3 billion (17.76bn Ringgit). Likewise, DiGi says Axiata would be entitled to recently issued shares in Digi and cash of 1.7 billion ringgit as a new debt in the merged telco. While each company will own about 33.1% of the merged telco.

“As part of an ownership equalization in Digi under the terms of the merger, Axiata will also receive close to 300 million ringgit from Digi’s largest shareholder Telenor,” it said in a statement.

Depending on regulations and approvals, the transaction is expected to complete by the second quarter of 2022.

The deal finally ratifies the convergence of Malaysia’s two largest telecoms which will now form Celcom Digi Bhd. This newly merged telco will possess a huge load of financial and technical resources to lead the telecom market in Malaysia and possibly beyond.

Also read: Google Cloud And Axiata Team Up For Cloud Digitalisation In Asia

Axiata In Nepal

The Malaysian telecom giant entered Nepal after its acquisition of a 60.4% stake in Ncell. That amounted to $1.03 billion (Rs. 109.86 billion) which is the largest deal ever in Nepal’s history. Axiata’s acquisition followed rebranding into Ncell Axiata, integrating the new investor’s prefix.

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What do you make up of Axiata’s growth potential over the telecom business? Do you expect any positive impact trickling into Ncell Axiata soon? Let us know what you think about the merger in the comments below.