Tuesday 23 Apr 2024
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This article first appeared in The Edge Financial Daily on August 30, 2019

KUALA LUMPUR: Axiata Group Bhd, which is 37.16%-owned by Khazanah Nasional Bhd, has to take into account the interests of the country and its employees during its merger talks with Norway’s Telenor ASA, says its president and group chief executive officer Tan Sri Jamaludin Ibrahim.

“There are a lot of terms to be agreed upon,” he said, dismissing reports that the deal faces “hiccups or issues”.

Jamaludin said the negotiations are on track to be concluded by early November and that the due diligence process is 70% complete.

“Most (merger) deals are primarily or wholly on a commercial basis, but this (Axiata-Telenor) deal involves two other major factors that are equally important, namely national and staff interests,” he told a media briefing to announce Axiata’s financial results for the second quarter ended June 30, 2019 (2QFY19) yesterday.

Jamaludin pointed out that the commercial part of the deal is already 90% agreed on, noting that there are “no major significant changes” to what has been announced previously about the deal.

There is “generally no change” in relation to the shareholding structure proposed, he said, reiterating that Axiata has no plans to downsize its staff.

“This is the single biggest M&A (merger and acquisition) in 20 years in the region, except North Asia. This is huge, unheard of. It’s not about problems, it’s about complexity.

“I want to put it into perspective that almost all M&As globally or in Malaysia involve only one big entity. But this time around, it involves 14 large entities across nine countries. So, imagine how big and complex this (merger exercise) is,” he added.

Quoting sources, The Edge weekly reported on Aug 19 that the merger talks are proving difficult to conclude, as there are many issues that make it difficult to go through. They include market talk of Telenor wanting to shift the merged entity’s headquarters to Singapore from Kuala Lumpur, as well as the downsizing of Axiata’s staff.

In May, Axiata had announced that it was in talks with Telenor to merge their operations in Asia. Assets that have been put on the negotiating table are both parties’ mobile service operations and telecommunications (telecoms) towers spread across Asean and Southern Asia.

The proposed merger would result in the emergence of Asean’s largest telecoms company, with a pro forma revenue of RM50 billion and a net profit of RM4 billion.

Telenor is the largest shareholder of Bursa Malaysia-listed Digi.com Bhd, in which it holds a 49% stake, while Axiata wholly owns Celcom Axiata Bhd.

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