There were no deal talks between the 2 parties and all the reported news of a possible merger are ‘unsubstantiated rumours’

by AZREEN HANI / pic by MUHD AMIN NAHARUL

AXIATA Group Bhd has no intention of revisiting a proposed merger with Norway’s Telenor ASA after the previous proposal to create the largest telecommunication group in the region fell through.

According to a source familiar with the matter, there is no truth in recent reports that Axiata and Telenor would continue to pursue a merger prospect.

The source said there were no deal talks between the two parties and all the reported news of a possible merger are “unsubstantiated rumours”.

“There were neither talks nor discussion that took place between Axiata (and Telenor) on its stake. It was just that: Rumours,” the source told The Malaysian Reserve and requested anonymity.

Bloomberg reported last week that Khazanah Nasional Bhd and Telenor have revived talks on a potential deal involving Axiata.

The report, which quoted sources, stated that the sovereign wealth fund and Telenor are in the early stages of exploring several possible scenarios, including Telenor buying part of the wealth fund’s stake in Axiata.

Khazanah, when contacted, declined to comment on the matter.

News of the possible stakebuying had boosted the share prices of Axiata and Digi.Com Bhd last Friday. However, both stocks slumped yesterday.

In May last year, Axiata and Telenor announced a possible merger, creating a global entity, MergedCo. The entity will combine Axiata and Telenor’s Asian operations within their Asean and South Asia footprint markets.

The proposed transaction was aimed at enabling the MergedCo to bring together Axiata and Telenor’s Asian operations’ unique combination of scale, competencies and vast experiences in leading and managing emerging and frontier markets.

In essence, the merger would have created the largest telco in the country as Telenor owns a substantial stake in Digi.

However, the multibillion merger fell through four months after discussion commenced. It is likely the shareholding, controlling stake of the new entity, leadership preferences and substantial job cuts had derailed the proposal.

Axiata president and group CEO Tan Sri Jamaludin Ibrahim was reported as saying that the company would walk out of the deal if it does not favour the country and the staff, despite the commercial benefit.

Jamaludin, who announced in September last year that Axiata aborted the talks with the Norway-based company, had not ruled out smaller-scale deals to ensure longterm survival of the telco.

“It’s just that we decided that it was too complex (and decided to end the talks),” Jamaludin was quoted as saying in an interview with a financial daily when asked about what caused the proposed merger to fall through.

The telco sector, which was once a darling among investors, is trying to keep profitability up as the Internet boon has eroded revenues, especially from voice calls and short messaging system.

Most telcos are still trying to recover the billions in capital expenditure invested in the fast 4G technology. But before they could even recoup the huge investment, telcos are now forced to invest billions more in super highspeed 5G technology, a feat which would hit smaller operators.

The industry is expected to share investment in 5G technology and lessen their capital outlay.