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Axiata Group and Telenor to merge operations in Asia

Axiata Group and Telenor to merge operations in Asia

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Axiata Group is in discussions with Telenor Group concerning a potential non-cash combination of their telecom and infrastructure assets in Asia (MergeCo), in which Telenor would take a majority stake. Telenor is expected to own 56.5% in MergeCo while Axiata will own 43.5%, with both parties acknowledging that this is preliminary subject to adjustments and due diligence. In Malaysia, the intention is to merge Celcom and Digi, with MergeCo as the majority owner in the combined business. Both parties intend to create a leading, well-diversified Pan-Asian telco with operations in nine countries with a total population of close to one billion people. The MergeCo will take an active role in accelerating technology transformation and digitalisation in Malaysia and across Asia, and plans to establish the Malaysian Research and Innovation Centre for technologies such as 5G, Internet of Things and AI The MergeCo will have its operational headquarters in Kuala Lumpur with the majority of functions and is planned to be listed at an international stock exchange as well as on Bursa Malaysia. Additionally, the new company will have close to 300 million customers and become one of Asia’s largest mobile infrastructure companies operating approximately 60,000 towers throughout Asia. According to the press statement, there is no certainty that these discussions will result in any transaction agreement between the parties. The merger will provide "attractive opportunities" to capture substantial synergies preliminary estimated at around US$5 billion in total, support future investments and create shareholder value. Axiata and Telenor will work towards finalising agreements in relation to the proposed transaction within the third quarter of 2019 following due diligence. The transaction will be subject to approval by shareholders, receipt of regulatory approvals and other customary terms and conditions. Gunn Wærsted, chair of Telenor Group, said said together, both parties 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,” he 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,” Sigve Brekke, president and CEO of Telenor Group, said. Axiata has operating companies in Malaysia, Bangladesh, Cambodia, Nepal, Sri Lanka and Indonesia, and the tower business edotco. Meanwhile, Telenor’s Asian footprint includes Thailand, Malaysia, Bangladesh, Pakistan and Myanmar. Read also: Telenor Group tipped to launch new digital marketing unit in Singapore Digi CEO to helm dual role as EVP for Telenor’s Developed Asia cluster

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