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MCMC: Malaysia needs to strike a balance when it comes to telco mergers and acquisition

It has been two weeks since Axiata and Telenor have announced a proposed merger for its Asian operations. While the Minister of Communications and Multimedia has yet to issue a statement, the Malaysian Communications and Multimedia Commission (MCMC) has introduced several guidelines for mergers and acquisitions.

According to the MCMC, the guidelines are introduced to increase transparency and to provide greater clarity to the industry when it comes to assessing mergers and acquisition. This also includes an authorisation of conduct which would substantially reduce competition in the Malaysian communications market.

According to MCMC Chairman, Al-Ishsal Ishak, the communications and multimedia industry is a critical component and key contributor to the country’s economy. Policies that ensure a competitive and forward-looking industry can significantly impact Malaysia’s economic growth.

He added that while mergers and acquisitions can allow our companies to achieve efficiency through greater scale and scope, as well as gain access to new technologies and markets, it can also serve to reduce competition and result in market dominance.

Al-Ishsal says “As the regulator of the communications and multimedia sector, it is imperative that we strike a balance between allowing companies to pursue their corporate strategies and prioritising shareholder returns, whilst maintaining competitive dynamics in the market to protect products and services available for consumers and businesses.”

You can view the Merger and Acquisition guidelines by downloading the PDF documents below:

https://www.mcmc.gov.my/skmmgovmy/media/General/pdf/Guidelines-on-Authorisation-of-Conduct.pdf

https://www.mcmc.gov.my/skmmgovmy/media/General/pdf/Guidelines-on-Merger-and-Acquisitions.pdf

To recap, Axiata and Telenor are currently in talks to establish a new merged global entity that will combine both telecommunication operations in Asia. This would create a new global champion which will be headquartered in Malaysia. According to the official announcement, the merger will offer a combination of scale, competencies and vast experiences in leading and managing emerging and frontier markets.

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It was announced that Telenor will be the major shareholder taking 56.5% stake while Axiata will own 43.5% of the new merged entity. For Malaysia, both Celcom and Digi will merge to create Malaysia’s largest mobile operator.

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Alexander Wong