Celcom and DiGi announced today that they will merge through their parent companies Axiata Group Berhad and Telenor Asia. A press release states that both parties will have an equal share of an estimated 33.1%. Axiata, along with Malaysian institutional investors, will own over 51% of the merger.
As part of the merger transaction, Axiata will receive newly issued shares from DiGi, which corresponds to a stake of 33.1% after the transaction and a cash settlement amount of around RM 2 billion. Of this, 1.7 billion RM will come from DiGi as new debt, the remainder of 300 million RM from Telenor.
The merger will be called Celcom DiGi Berhad and is intended to pool the resources of both parties in order to accelerate the digitization change carried by COVID-19 in Malaysia. It will continue to be listed on Bursa Malaysia.
How does this affect customers?
Not a lot, really. Existing users will have the option to keep their telecommunications brand as both the Celcom and DiGi brands will remain unchanged after the merger.
Axiata and Telenor will develop 5G use cases to bring better connectivity to Malaysians. This is a step that is required for the introduction of 5G phones. They will also create the so-called innovation center, which can play a direct role in training employees for the future economy.
"Digital endeavors and the growing demand for connectivity require significant investments," said Dato 'Izzaddin Idris, President and Group Chief Executive Officer of Axiata.
"To stay one step ahead of the curve, we need to strengthen the foundation to continuously offer high quality broadband, improve 4G connectivity and then support the acceleration of the 5G rollout."
An estimated 19 million customers are expected
Axiata announced that Celcom DiGi Berhad will be recognized as the leading telecommunications service provider in Malaysia for value, revenue and profits. and an estimated 19 million customers.
Both parties also assured that there will be no cuts due to this merger. Instead, new opportunities should be created for employees and they should be enabled to develop new skills in various areas.
Axiata and Telenor will work towards finalizing agreements by Q2 2021, adding that there is no assurance that these discussions will result in an agreement.
Editor's note: We have asked Celcom for more information and will update the piece as soon as they respond.
- You can find more information about Celcom and DiGi here.
Selected image source: Celcom Axiata / DiGi