Malaysia deal creates new leader in mobile operator market

Malaysia deal creates new leader in mobile operator market

A massive deal uniting two players in the Malaysian telecoms market to make the biggest operator in the country has finally gone through.

As promised last week, Malaysian telecoms firm Axiata Group Bhd and Norway's Telenor ASA have now sealed an agreement to merge their mobile operations in Malaysia in a $15 billion deal. Operators Celcom Axiata Bhd and DiGi.Com Bhd will form one company, with Axiata and Telenor each owning 33.1% of the merged firm. The result will be a new market leader in Malaysia.

Axiata and Telenor have said that the coming together of what were formerly the country's second and third-largest mobile services providers behind Maxis Bhd will create a company estimated to have annual revenue of $3 billion, with core profitability of $1.4 billion from a subscriber base of about 19 million.

Celcom Digi Berhad, as the company is to be known, will remain listed in Kuala Lumpur, in line with a preliminary agreement announced in April.

According to Reuters, the deal comes at a time when mobile operators are facing pressure on profits in a challenging industry environment. The partners in the merger say it will make the two companies, as the new entity Celcom Digi, commercially stronger and more resilient, with greater scale to invest in improved network coverage and quality.

Celcom Digi, it is suggested, will also be able to plan cost cuts and savings on capital expenditure.