Norwegian telco Telenor Group and Malaysia-based Axiata Group have announced their discussions regarding a prospective non-cash merger of their telecom and infrastructure assets in Asia, in which Telenor would take a majority stake. Telenor and Axiata’s jointly owned telecommunications giant MergeCo would combine the two companies’ operations in South and Southeast Asia, and in its headquarters in Malaysia would serve almost 300 million customers using approximately 60,000 communication towers located across Asia.
Gunn Wærsted, Chair of Telenor Group, said: “Today we announce that Telenor and Axiata are in discussions on joining forces in Asia, one of the most dynamic and innovative regions in the world. Together, we aim to create a leading and well-diversified pan-Asian telecom and infrastructure company with substantial synergy potential and strong regional operations. It is Telenor’s strategy to develop and create value from our core telco assets in the Nordic and Asian region. This potential merger is in line with that strategy, set by the Board and Management.”
Sigve Brekke, President and Chief Executive Officer of Telenor Group, said: “By creating one of Asia’s leading telecom players with strong regional operations in nine countries and close to 300 million customers, we will combine scale and competence, thereby unlocking considerable synergies. I am confident this will create significant value for shareholders and will be beneficial to our customers.”
According to the announcement, the combination of two strong organisations with complementary footprints and “a merger of equals spirit” will provide beneficial synergies estimated to total around USD 5 billion. Moreover, this merger would support future investments and create shareholder value.
MergeCo is expected to help accelerate technological development and digitisation in Malaysia and throughout Asia, with plans to establish the Malaysian Research and Innovation Centre for advanced technologies such as 5G, Internet of Things (IoT) and Artificial Intelligence (AI).
Jamaludin Ibrahim, Axiata president and CEO, said: “With the dynamic combination of breadth, experience and knowledge of Asia’s two regional champions…we bring the best of Asian and European cultures. Leveraging on the synergies of our combined assets, organisations, talents, best practices, scale and financial firepower, we would create the largest telecom operator in the region. Additionally, we would also intend to create the largest mobile operator in Malaysia, one of the largest towercos in the world and the largest innovation centre in the region.”
Based on equity value, Telenor would own 56.5 percent of the merged company, with Axiata holding the remaining 43.5 percent. Both companies state that these details are preliminary and are subject to adjustments and due diligence.