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Telenor and Axiata are in discussions to merge telecom and infrastructure assets in Asia, forming MergeCo as part of widespread regional growth plans.
Terms of the deal would see Norway-based Telenor assumed a majority stake of 56.5 per cent in the new venture, with Malaysia-based Axiata set to own 43.5 per cent.
Subject to due diligence, the non-cash combination would create a “leading, well diversified Pan-Asian telco” with operations in nine countries, spanning a population of close to one billion people.
Specifically, MergeCo will serve almost 300 million customers, becoming one of Asia's largest mobile infrastructure companies operating approximately 60,000 towers across the region.
Furthermore, MergeCo will have its operational headquarters in Kuala Lumpur with the majority of functions, backed by plans to be listed at an international stock exchange as well as on Bursa Malaysia.
In Malaysia, both parties said the intention is to merge Celcom and Digi, with MergeCo as the majority owner in the combined business.
“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,” said Gunn Wærsted, chair of Telenor Group. “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.”
Wærsted said Telenor and Axiata 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.
“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,” added Sigve Brekke, president and CEO of Telenor Group. “I am confident this will create significant value for shareholders and will be beneficial to our customers.”
Should the deal go through, MergeCo will aim to take an "active role" in accelerating technology transformation and digitalisation in Malaysia and across Asia, with plans to establish the Malaysian Research and Innovation Centre for state-of-the-art technologies such as 5G, Internet of Things and artificial intelligence.
Telenor's Asian footprint includes Thailand, Malaysia, Bangladesh, Pakistan and Myanmar, while Axiata has operating companies in Malaysia, Bangladesh, Cambodia, Nepal, Sri Lanka and Indonesia, and the tower business edotco.
Axiata's mobile operations in Bangladesh, Robi, will continue to be separately and independently managed by Axiata.
There is no certainty that these discussions will result in any transaction agreement between the parties.
