The merger is expected to serve 20m customers with revenues of RM13b, and Ebitda of around RM5.8b
by AZALEA AZUAR
MALAYSIA’S telecommunications (telco) industry is ending the year with the completion of the Celcom Axiata Bhd-Digi.Com Bhd merger and the 5G rollout.
On Nov 30, Axiata Group Bhd’s subsidiary Celcom and Telenor Asia Pte Ltd’s subsidiary Digi announced that they have completed their merger operations where both parties will possess equal ownership at 33.1% each.
The new company will create an approximately US$10 billion (RM44.4 billion) converged operator in Malaysia.
Telenor Asia and Axiata decided to merge their Malaysian operations back in April 2021 but it was only on June 29 this year that the Malaysian Communications and Multimedia Commission (MCMC) allowed these two parties to proceed.
Then on Nov 18, their shareholders approved the proposed merger between Celcom and Digi.
The purpose of this merger was to establish a market leader that could have greater impact and be a strong local partner for high-value clients, businesses and small and medium enterprises (SMEs).
According to Telenor Asia head and executive VP Jørgen C Arentz Rostrup, this new merger will be making use of the best of both worlds.
“It (the merger) is well positioned to drive innovation and high-skilled employment, increase consumer choice for digital needs, and explore opportunities within 5G services, artificial intelligence (AI) and Internet of Things (IoT).
“Our ambition is to become a leading operator in several markets because we believe it is a good way to increase value for businesses, consumers and shareholders,” he said in a recent statement.
Rostrup also believed that this giant merger has paved the right path for them to a sustainable long-term growth.
The new Celcom-Digi merger commenced operations on Dec 1 and is expected to serve 20 million customers with revenues of RM13 billion, and Ebitda of around RM5.8 billion.
On the other hand, Axiata group chairman Tan Sri Shahril Ridza Ridzuan said this merger will invest in expanding its network coverage and supporting Malaysia’s digital ecosystem. “We are also heartened at the role this tech giant can play in spurring talent development here in our very own backyard, as Malaysia charts advancements in 5G innovations, automation, IoT, AI and cyber resilience, among others.
“Moving forward, I am confident that Celcom-Digi — backed by the global experiences, excellent governance standards and financial strengths of Axiata and Telenor Asia as shareholders — is well placed to serve Malaysian consumers and enterprises seeking to step up on digital competitiveness in the current era,” he mentioned.
In order to catalyse the IR4.0 and strengthen the local ecosystem, Celcom-Digi also plans to invest RM250 million over a period of five years.
The new merger will also focus on developing rural areas by bridging the digital divide to spur better socioeconomic participation.
Moreover, the Employees Provident Fund, Permodalan Nasional Bhd and the Retirement Fund (Inc) have been named the shareholders for the company.
After a long wait, Malaysians can now connect to 5G networks.
Five mobile network operators (MNOs) have signed access agreement with DNB, namely Celcom Axiata Bhd, Digi Telecommunications Sdn Bhd, Telkom Malaysia Bhd, U Mobile Sdn Bhd and YTL Communications Sdn Bhd, all of which are offering 5G services to their subscribers.
DNB announced that the 5G network coverage will exceed 40% in populated areas nationwide by this month and is on track to achieve 80% by 2024 or earlier.
It will include almost all of Kuala Lumpur (KL), Putrajaya, Selangor, Penang, Johor and Negri Sembilan, as well as some parts of Melaka, Perak, Kelantan, Sabah and Sarawak.
DNB expects 5G networks to reach 14 million people located in the areas where the network has been established and in excess of 30 million over the next two years.
Newly appointed Prime Minister Datuk Seri Anwar Ibrahim will review the 5G network which was owned by the previous government and he has raised concerns on pricing, transparency and monopoly.
These plans will be evaluated to ensure they follow the procedures properly and they need to be reviewed in a transparent manner.
Rakuten Trade Sdn Bhd head of equity sales Vincent Lau believed that the government’s decision to review the 5G rollout and urging telcos to reduce the price is a good move.
“I think that it will take time to see the revenue flow down to the bottom line for the telcos, to the share price since the announcement of the price reduction.
“It is too early to tell the take-up rate of 5G. It is a good step but it will take some time,” he told The Malaysian Reserve recently.
Lau has also maintained ‘Neutral’ call on the telco sector and believed that the margin will be compressed.
Meanwhile, the Cabinet will decide on the direction of 5G network implementation in the country, Communications and Digital Minister Fahmi Fadzil recently said.
He added that his ministry and the Finance Ministry had held a meeting on Dec 12 to discuss the implementation of the 5G network project by DNB.
“What’s important is we don’t want this matter to be delayed. We do not want this thing to be incomplete. It has cost us and no matter what we need to settle it immediately so that Malaysians, the SMEs, everyone can use this infrastructure to help boost business activities and daily life,” he said on the “Bicara Naratif ” episode entitled “Building a New Narrative” by Berita RTM.
Admitting that the matter could not be solved instantly, Fahmi said the 5G issue needs to be resolved before embarking on a 6G network.
- This article first appeared in The Malaysian Reserve weekly print edition