Axiata will transfer its stake in Celcom Axiata Bhd. to Digi.com Bhd. for 17.8 billion ringgit, according to a filing on Monday. In return, it will get new shares and 1.7 billion ringgit in cash from Digi, and close to 300 million ringgit from Telenor. The merged entity will have a “pre-synergy equity value” of close to 50 billion ringgit ($12.1 billion).
A formal agreement, first reported by Bloomberg News, comes after Axiata and Telenor announced in April that they were in advanced discussions to merge Celcom and Digi that could create Malaysia’s biggest cellphone operator by subscribers. The merger will also become the nation’s largest telecom deal on record, surpassing Binariang GSM Bhd.‘s 2007 acquisition of Maxis Communications Bhd. in a 41 billion ringgit deal, according to data compiled by Bloomberg.
Axiata and Telenor will have an equal ownership of 33.1% each in the merged entity to be known as Celcom Digi Bhd., which will have a subscriber base of 19 million and pro-forma revenue of 12.4 billion ringgit. The combination may result in cost and capex synergies of about 8 billion ringgit on a net present value basis, according to the filing.
Celcom Digi will also 250 million ringgit over five years in building an innovation center in the capital city of Kuala Lumpur, according to the statement.
Shares in Axiata fell 1.5% at the midday break in Kuala Lumpur after losing as much as 4.2% earlier. Digi.com shares climbed 3.1%.
BLOOMBERG / TMR