MCMC releases guidelines on M&A for telcos

The guidelines aims at providing clarity, transparency when assessing M&As of telcos

by NG MIN SHEN / pic by MUHD AMIN NAHARUL

THE Malaysian Communications and Multimedia Commission (MCMC) has released guidelines on mergers and acquisitions (M&A), two weeks after an announcement of one of the country’s largest proposed mergers in the telecommunication sector.

Government-linked Axiata Group Bhd and Norwegian telecommunication company (telco) Telenor ASA announced a proposed new merged global entity by combining their Asian operations in a non-cash deal.

The proposal also involves plans to merge Celcom Axiata Bhd and Digi.Com Bhd into the country’s largest mobile operator with a total of 21 million subscribers.

The proposed merger had stirred worries about Celcom-Digi merged entity monopoly. Others had highlighted about the risks of foreign majority-owned entity control of the local cellular and data market.

MCMC in a statement said the guidelines aimed at increasing transparency and providing clarity to the industry on the regulator’s approach when assessing M&A of telcos.

The MCMC also released its Guidelines on Authorisation of Conduct.

MCMC chairman Al-Ishsal Ishak (picture) said policies that ensure a competitive and forward-looking communications and multimedia industry can significantly impact the country’s economic growth, given that the industry is a critical component of and key contributor to Malaysia’s economy.

“While M&A can allow our companies to achieve efficiency through greater scale and scope, as well as to gain access to new technologies and markets, it can also serve to reduce competition and result in market dominance.

“As the regulator of the communications and multimedia sector, it is imperative that we strike a balance between allowing companies to pursue their corporate strategies and prioritising shareholder returns, while maintaining competitive dynamics in the market to protect products and services available for consumers and business,” he said.

But he did not refer to the proposed Axiata-Telenor merger.

Both guidelines are available at the MCMC’s official website. Axiata, which fully owns Celcom, and Telenor, which controls a 49% stake in Digi, had said the new merged global entity would have a proforma revenue of over RM50 billion and earnings before interest, taxes, depreciation and amortisation (Ebitda) of around RM20 billion.

The Celcom-Digi merged group would have a proforma revenue of some RM14 billion, Ebitda of about RM5 billion and estimated 21 million customers — about two-thirds of the country’s population.

Following the announcement of the proposed merger, Al-Ishsal told The Malaysian Reserve that the MCMC would only give the green light for the deal “after a thorough review”, although the regulator is “always open to initiatives by the industry”.

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