30th June 2022 - 3 min read
Axiata Group Berhad and Digi.Com Berhad have received clearance from the Malaysian Communications and Multimedia Commission (MCMC) to proceed with a proposed merger between their respective subsidiaries, Celcom and Digi. If successful, this will see the emergence of the largest telco in Malaysia, to be named MergeCo.
According to the MCMC, it had thoroughly assessed the proposed merger and approved the deal after both telcos agreed to address various competition issues that were highlighted to them. “MCMC had considered the commitment offered by the applicants and is satisfied that it will significantly reduce the competition issues that will or may arise as a result of this merger,” it remarked.
To note, both telcos have agreed to a set of undertakings to allow the merger to proceed – one of which is to ensure that the merger will not affect existing and new Mobile Virtual Network Operators (MVNOs). Additionally, the MVNOs must be provided continued access to wholesale services for three years.
Another condition that must also be met is for Celcom to sell off its sub-brand, Yoodo, within 18 months of the deal closing. In the event that this is not possible, it has to cease Yoodo’s operation within three months of the expiry of the period.
On top of that, the agreement also stated that the merged company will be required to operate all its prepaid and postpaid brands as a single corporate brand (MergeCo) within two years after the merger is completed.
In a joint statement, parent companies Axiata Group Berhad and Telenor Asia both said that they will now be advancing to the next phase of the approval process. “Upon completion of the transaction, the parties look forward to realising the potential of the proposed merged company, which is expected to culminate in a stronger capacity to drive digitalisation in society broadly, for consumers, businesses, the partner ecosystem and for the development of local talent,” they added.
This merger between Celcom and Digi has actually been in the works for a while now; Axiata Group Berhad and Telenor Asia had first revealed their intention to do so back in April 2021. This was quickly followed by the submission of their proposal to the MCMC in July.
Now that the MCMC has approved the merger, the telcos need to get the green light from the Securities Commission Malaysia, Bursa Malaysia, as well as their shareholders. The merger is expected to be completed within the second half of this year.
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