Sunday, April 2, 2023

Celcom – Digi Merger: MCMC releases Guidelines on Mergers and Acquisitions

Following the proposed merger between Axiata Group Berhad and Telenor ASA for its operation in ASEAN earlier this month, the Malaysian Communications and Multimedia Commission (MCMC) released two documents relating to merger and guidelines.


The proposed merger includes combining the operation of Celcom Axiata and Digi in Malaysia.

The two new documents from MCMC include: Guidelines on Mergers and Acquisitions and Guidelines on Authorisation of Conduct.

MCMC said these documents are aimed to increase transparency and provide clarity to the industry on MCMC’s approach when assessing mergers and acquisitions of telecommunications companies, as well as authorisation of conduct which would substantially lessen competition in the communications market.

According to MCMC’s 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.

“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.

“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,” Al-Ishsal added.

The proposed merger comprise six countries with number one positions, two countries with number two positions and one market with third position within their respective markets. The deal does not include Robi Axiata Limited, a subsidiary of Axiata operating in Bangladesh as it shall continue to be managed independently by Axiata.

The merger, if successful, will have proforma revenue of more than RM50 billion and Earnings Before Interest, Taxes, Depreciation & Amortisation (EBITDA) of more than RM20 billion and controlled operating subsidiaries in nine countries with a combined total population of more than one billion people and 300 million customers. Telenor is expected to own 56.5% and Axiata will own 43.5% of the new proposed merged entity (MergedCo).

At the moment, Telenor have operations in Thailand (dtac), Pakistan, Malaysia (Digi), Myanmar, Bangladesh (Grameenphone).

Axiata have presence in Malaysia (Celcom), Indonesia (XL Axiata), Sri Lanka (Dialog), Cambodia (SMART), Nepal (NCELL) and Robi (Bangladesh).

Celcom is a wholly-owned unit of Axiata while Telenor Group has a 49% stake in Digi.

The deal is expected to be finalised by end of quarter three, 2019.

[Download PDF] – MCMC Guidelines on Mergers and Acquisitions and Guidelines
[Download PDF] – MCMC Guidelines on Authorisation of Conduct

Kugan is the co-founder of MalaysianWireless. He has been observing the mobile industry since 2003. Connect with him on Twitter: @scamboy

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