Two of Malaysia’s biggest telecommunications service providers will be combined into one mammoth entity that will serve over 19 million customers!
Parent companies Axiata Group and Telenor Asia have confirmed rumours of ongoing discussions between them to combine two of their biggest subsidiaries — Celcom and Digi — into a single colossal entity. The merger is on its way with talks already at an “advanced stage.”
Formerly a company under the purview of Malaysia’s largest broadband service provider, Telekom Malaysia, Axiata Group Berhad has since been operating and serving multiple emerging markets in the region. As for Telenor Asia, which heads Digi, the company is owned by Norwegian conglomerate — Telenor — and they’re one of the largest telecommunications providers in the world with a focus on Scandinavia and Asia.
The merger will see Axiata and other Malaysian boards owning 51% of the new company, while Telenor Asia will own a 33.1% share. Axiata released a statement covering part of the merger, where they will receive newly issued shares in Digi amounting to 33.1 percent in post-transactional shares, valued at US$483.6 million (~RM2 billion). Digi will be putting forth the larger amount of the sum as new debt, while the rest will be covered by Telenor Asia.
“Both parties will work towards finalising agreements in relation to the proposed transaction within the second quarter of 2021,” states Axiata. “The transaction will be subject to approval by Celcom and Digi shareholders, receipt of regulatory approvals and other customary terms and conditions.”
IS BIGGER GENERALLY BETTER?
The new entity which will be known as Celcom Digi berhad, is set to possess a 19 million-strong customer base that will by far be the largest in the country, instantly turning them into a market leader. Going by the official press statement, Celcom Digi Berhad aims to be a “leading Malaysian telco” with plans in the works to achieve 5G competency as well as other telecommunications advancements.
“Where connectivity is a critical digitalization enabler, the telco industry will play an integral role in supporting the government’s decision to fast-track 5G services and deliver ubiquitous high quality broadband speed and services,” said the press release. “This will bode well for customers as a move that would reap benefits for the economy and industry.”
With confirmation of the emergence of a new near-monopoly on telecommunication services, many from the general public are expressing concerns if broadband connectivity and quality will even improve. Compared to neighbouring countries, Malaysia still lags behind with subpar service quality that has yet to be dealt with.
Lest we forget, last year revealed that no less than five Malaysian telcos including Maxis, Digi, and Celcom were hit with a whopping US$1.1 million (RM4.6 million) in fines simply for providing services that were below the acceptable standards outlined by the Malaysia Communications and Multimedia Commission (MCMC).
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