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Axiata and Telenor call off merger plans

Axiata has officially announced that the proposed merger between Axiata and Telenor is officially off. Both parties have agreed to end discussions regarding a non-cash combination of their telecom and infrastructure assets in Asia.

According to the statement, both parties have mutually agreed to end the discussions due to some complexities. The two telecommunications giants still acknowledged the strategic rationale of the proposed transaction and they do not rule out that a future transaction could be possible. This also means that Celcom and Digi will continue to operate as separate telcos in Malaysia.

Axiata states that the termination of the proposed transaction will not affect the Group in its ability to achieve its Digital Champion aspirations by 2022. The group is confident that Axiata has the capacity to leverage opportunities across the Consumer, Home, Enterprise/IoT, Digital and Tower Co businesses as the industry moves towards convergence.

Axiata’s Chairman Tan Sri Ghazzali Sheikh Abdul Khalid said, “The Board acknowledges the strong strategic rationale of the Proposed Transaction and is equally cognizant of the level of complexity of such a deal that extends across nine countries and 14 major entities.”

“Regardless of the expressed synergies of the merger, we are confident that the termination of the Proposed Transaction does not affect the Group in achieving its Digital Champion ambitions.”

“On behalf of the Board of Axiata, we are grateful for the support of the Government of Malaysia, our investors and all of our employees during this process.”

The proposed merger between Axiata and Telenor was announced in May this year and it aims to create a new global operator that’s headquartered in Malaysia. The merger is expected to form a new entity with a proforma revenue of more than RM50 billion and EBITDA of more than RM20 billion. This will cover subsidiaries in nine countries that have a combined population of over 1 billion people and 300 million customers.

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A few weeks ago, it was reported that the merger between the Norwegian and Malaysian company has hit a snag. One of the purported issues is the imbalance in the equity with Axiata demanding a larger stake. It was previously reported that Telenor will be holding 56.5% of the shares while Axiata takes 43.5%. Another speculation was that Telenor had plans to move the headquarters to Singapore, which isn’t agreeable by Axiata. A couple of days later, Axiata Group President and Group CEO, Tan Sri Jamaludin Ibrahim had reassured that the deal is still on and 90% of the commercial aspect of the merger has been done.

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Alexander Wong