Business as usual for Celcom after Axiata-Telenor merger void

Celcom will continue to focus on strengthening ourselves, go to the market and win, says CEO


CELCOM Axiata Bhd says it is “business as usual (BAU)” following the dissolution of merger talks between its parent, Axiata Group Bhd and Telenor ASA.

“Even during the discussions, it was BAU for us. We will continue to focus on strengthening ourselves, go to the market and win,” Celcom CEO Idham Nawawi (picture) told reporters at a briefing on the group’s latest financial results in Petaling Jaya, Selangor, yesterday.

Celcom CFO Jennifer Wong added that “nothing changed” for the telecommunication company (telco) after the proposed merger was first announced, as seen in the continued network rollout efforts and introduction of new products.

“Even after the announcement of the merger with due diligence ongoing, it was BAU. We didn’t stop anything,” she said.

Axiata and Norway-based Telenor said last Friday they mutually agreed to end discussions for a merger of their Asian operations due to “complexities” in the deal.

Idham declined to elaborate further on the “complexities”.

The proposed merger, which was first announced in May, also included plans to merge Celcom with Digi.Com Bhd, a fellow mobile network operator which is 49%-owned by Telenor.

Notably, Axiata and Telenor have said they do not rule out the possibility of a future transaction.

The now-defunct merger had been proposed in response to heightened competition, rising data monetisation cost and increasing capital expenditure despite flat revenue growth.

Indeed, Idham believes these factors are likely to drive market consolidation in Malaysia at some point.

The country already has a mobile penetration rate of 140% over a population of some 32 million, he said.

“In some markets closer to home, there’s been consolidation of players to about three or maximum four. That’s been happening because of the continuous need for investment and reinvestment, and the speed of new technologies coming in,” he said.

The Malaysian mobile market is dominated by the “Big 3” telcos — Celcom, Digi and Maxis Bhd — while facing increasing competition from the likes of U Mobile Sdn Bhd and Telekom Malaysia Bhd’s unifi Mobile.

“We ask ourselves, do you foresee a need for consolidation? Yes, it’s whether the market will be able to sustain the number of players we have today. Sooner or later that consolidation will happen, or has to happen because it’s very difficult for this number of players to remain profitable and continue to invest,” Idham said.

The telco has earmarked RM1 billion in capital expenditure for 2019, after spending about RM1.1 billion last year.

Its profit after tax and minority interests rose 41.1% to RM218.2 million in the second quarter ended June 30, 2019 (2Q19) from RM154.59 million last year, according to data from Axiata.

Celcom attributed the profit growth to the group’s focus on high-value customers and cost discipline.

Revenue, however, fell 8.3% to RM1.66 billion in 2Q19 from RM1.81 billion the year before on lower device sales and the downward revision in domestic interconnect and roaming rates.

Celcom’s postpaid average revenue per user (ARPU) rose by RM1 quarter- on-quarter to RM85 in 2Q19, while its prepaid ARPU improved by RM3 to RM37.