No more waiting: Celcom-Digi merger receives MCMC’s green light

THE Malaysian Communications and Multimedia Commission (MCMC) has given the go-ahead to Axiata Group Bhd and Digi.Com Bhd to proceed with their proposed merger of Celcom’s and Digi’s telco operations.

Both telcos received a “Notice of No Objection” this morning (June 29) as per stated in a media statement by the MCMC just before the commencement of today’s stock market trading. Both Axiata and Digi will resume their trading at 10am today.

The merger application for Celcom and Digi was submitted to MCMC in July 2021.

The issuance of the notice follows a substantive assessment of the proposed merger application and due consideration of Axiata’s and Digi’s response to the MCMC’s Statement of Issues (SOI) released earlier in April 2022.

“The Notice signifies that MCMC does not object the proposed merger and that the parties to advance to the next phase of the proposed transaction,” Celcom and Digi pointed out in a joint statement. “Axiata and Digi are positive on the prospects of the proposed merger having passed a significant milestone in the ongoing approval process.”

Both Axiata and Digi also pledged that the merged entity will provide better network quality and coverage as it will be primed to invest in network expansion to support growing demand for data and digitalisation.

In addition, as societies and businesses increasingly turn to digitalisation for productivity and efficiency gains, the entity will be well-placed to drive 5G solutions, catalyse new growth opportunities for large enterprises and SMEs (small medium enterprises), and attract and partner global digital giants in support of JENDELA (National Digital Network) and MyDigital aspirations.

“In further unlocking the nation’s digital potential, the MergeCo has proposed to invest up to RM250 mil over five years to build a world-class innovation centre in Kuala Lumpur to keep Malaysia at the forefront of the global digital evolution,” noted both telcos.

“The innovation centre will be pivotal in advancing extensive research and development leveraging 5G, AI (artificial intelligence) and IOT (Internet of Things) technology. In addition to catalysing and nurturing a knowledge-based workforce in line with Malaysia’s digital aspirations, local digital start-ups will be also able to leverage the platform to leapfrog their technology and innovation capabilities.”

To address the preliminary issues identified by the MCMC, Axiata and Digi have offered a set of undertakings to ensure that consumers in Malaysia will continue to benefit from effective competition in the telecommunications sector. The undertakings include:

  • Divestment of 70 MHz of the merged entities’ spectrum across 1800 MHz, 2100 MHz, and 2600 MHz with the first band to be returned to the MCMC within 24 months after completion of the merger, and the second and third bands to be returned within 36 months after completion of the merger;
  • Establishing a separate independent business unit for MVNO (mobile virtual network operators) wholesale business under the merged entity within six months after completion of the merger and ensuring continuity of access to wholesale services for MVNOs at terms no worse off than existing agreements;
  • Divestment of Celcom’s “Yoodo” brand within the stipulated time after completion of the merger as committed to MCMC which currently offers fully digital and customisable retail mobile plans to subscribers;
  • Enabling non-exclusive distributors in the Sabah, Sarawak, Kelantan, Pahang and Terengganu regions by the end of the third year after completion of the merger; and
  • Positioning the existing Celcom and Digi brands as products under a single MergeCo corporate brand by end of the second year after completion of the merger.

The completion of the proposed transaction will now be subject to the approval of the Securities Commission (SC), Bursa Malaysia, by both Axiata and Digi shareholders, and other customary terms and conditions.

The parties estimate to complete the proposed merger within 2H 2022 as announced previously. At completion, Axiata and Telenor (Digi’s parent company) will hold equal ownership of 33.1% each in the new merged company which will be named Celcom Digi Bhd and will continue to be listed on Bursa Malaysia.

At the close of yesterday’s (June 28) trading, Axaiata was up 7 sen or 2.55% to RM2.81 with 3.48 million shares traded (market cap: RM25.79 bil) while Digi was up 4 sen or 1.25% to RM3.21 with 3.09 million shares traded (market cap: RM25.27 bil). – June 29, 2022

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