Report: Khazanah and Telenor U-turns again on Axiata merger

A report from Bloomberg indicates that a “potential deal” between Khazanah and Telenor is being discussed—again. Just over 4 months ago, the possible merger between Telenor and Axiata was scrapped after protracted discussions over several complexities in the deal.

At the time, however, sources close to the matter earlier stated that a future deal was still possible. Khazanah, who is the largest shareholder in Axiata with a 37% stake, is considering selling part of its share in Axiata, according to the report. This could also lead to the merging of Axiata and Telenor’s phone tower assets, or even consolidation of both entities in certain markets while we could also see listing of the two carrier’s combined market operations.

Additionally, this would allow Telenor to strengthen its foothold in the Asian region—previously, there were issues regarding the potential retrenchment of Axiata staff in Malaysia, with sources close to the matter at the time stating that Malaysian-based staff were expecting severe job cuts.

It’s worth noting, however, talks appear to be at early, preliminary stages at the present. Discussions could still fall apart, the report concedes, and Axiata, Khazanah, and Telenor have declined to comment for now.

In September 2019, Axiata and Telenor were in talks to merge their telecommunication operations in the Asian region, which would have led to a combined entity with US$13 billion (about RM52 billion) in sales and a customer base of roughly 300 million.

However, talks broke down over a number of issues. One of the reported problems was an imbalance in equity sharing, with Axiata demanding a larger stake in the partnership. According to report, Telenor was seeking 56.5% while Axiata was to hold 43.5%.

Another issue, as mentioned, was Telenor’s purported plan to move the headquarters of the combined entity to Singapore—a plan not taken to kindly by certain parties in Malaysia. Despite reassurances from senior figures at Axiata Group, the deal fell through shortly after.