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Celcom Axiata and Digi receive green light for proposed merger

Celcom Axiata and Digi receive green light for proposed merger

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The Malaysian Communications and Multimedia Commission (MCMC) has approved the merger of Celcom Axiata's and Digi's telco operations. The completion of the proposed transaction will now be subject to the approval of the Securities Commission, Bursa Malaysia, and both Axiata and Digi shareholders. News of the merger was first announced last April and the application for the merger was submitted to MCMC in July 2021.

According to a statement by Digi, MCMC issued a Statement of Issues (SOI) to both Celcom and Digi in April 2022 to address concerns that the merger may reduce significant competition in the telco industry. To that end, both telcos have agreed to several undertakings.

These include the divestment of Celcom's Yoodo brand within the stipulated time as committed to MCMC, enabling non-exclusive distributors in the Sabah, Sarawak, Kelantan, Pahang and Terengganu regions within three years after completion of the merger, and positioning the existing Celcom and Digi brands as products under a single MergeCo corporate brand within two years after completion of the merger.

Both telcos estimate that the merger will be completed by the second half of 2022. Upon completion of the merger, Axiata and Telenor will hold equal ownership of 33.1% each in the new merged company, which will be named Celcom Digi Berhad, and will continue to be listed on Bursa Malaysia.

Shahril Ridza Ridzuan, chairman of Axiata said that it looks forward to playing an active role in encouraging national competitiveness through the provision of connectivity and research platforms whilst also supporting Malaysia's entrepreneurs and digital talents in the race to confidently position Malaysia for growth in the digital economy.

Bruaset Kjoel, chair of the board of directors, Digi added: "Together, Celcom and Digi will bring better innovations to meet our customers’ growing digital needs and for all participating in the digital economy to capture new growth opportunities in a fast-changing world. We will now focus on completing the remaining necessary steps to conclude this transaction and work on delivering a seamless integration programme to bring the vision and value of the merged entity to reality for the benefit of many."

Separately, MCMC recently served Celcom, U Mobile, and Digi each a commission directive for failing to meet broadband service standards in the country. MCMC also said that the telcos failed to meet broadband service standards at a few locations identified in Langkawi, including Langkawi Highway and a few tourist destinations. The telcos can be fined up to RM200,000 in accordance with Section 109 of the Communications and Multimedia Act if they fail to follow through with the directive.

This came following a nationwide technical audit in 3,038 locations across Malaysia’s 13 state and three federal territories after being prompted by the minister of multimedia and communication Annuar Musa. The locations were picked based on complaints received by the MCMC from Malaysians. The directives require the telcos to improve the quality of their service and user experience in accordance with MCMC’s Mandatory Standards for Quality of Service which encompasses the minimum standards for customer service and service quality standards for telecommunication networks.

Photo courtesy: Shutterstock

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