Celcom-Digi merger gets the greenlight in Malaysia

Kuala Lumpur Skyline - Malaysia

Digi.Com Berhad (Digi), a Malaysian subsidiary of Telenor Group and Axiata Group Berhad have received approval from the Malaysian Communications and Multimedia Commission (MCMC) on the merger of Celcom and Digi’s telecom operations (MergeCo).

Through the issuance of a Notice of No Objection, the MCMC allows Celcom and Digi to continue to the next stages of the transaction. The deal is now subject to the approval of the Securities Commission, Bursa Malaysia, and by Axiata and Digi shareholders.

“We have reached a positive milestone in the Malaysian merger process with this regulatory clearance. We are excited to move towards realising the full potential of bringing these two companies together, establishing a commercially stronger and more resilient digital service provider," said Jørgen Arentz Rostrup, executive vice president and head of Telenor Asia.

With the proposed structural moves in Thailand and Malaysia, Telenor has a clear ambition to create future-fit companies that can better support ambitious national digital aspirations and bring new, advanced services to consumers across the region."

In order to ensure competition in the Malaysian marketplace, Axiata and Digi have agreed to undertake measures to address preliminary issues identified by the MCMC. These include:

  • Divestment of 70MHz of MergeCo’s spectrum across 1800MHz, 2100MHz, and 2600MHz over a period of 36 months.

  • Creating an independent business unit for MVNO wholesale business under MergeCo within six months of completion.

  • Divestment of Celcom’s Yoodo brand post-completion of the merger as committed to MCMC.

  • Enabling non-exclusive distributors in the Sabah, Sarawak, Kelantan, Pahang and Terengganu regions by the end of the third-year post-completion of the merger.

  • Positioning the existing Celcom and Digi brands as products under a single MergeCo corporate brand by the end of the second-year post-completion.

Once completed, MergeCo will deliver better network quality and coverage, and better position it to invest in network expansion, drive 5G solutions and catalyse new growth opportunities for large enterprises and SMEs.

Specifically, MergeCo has plans to invest up to RM250 million (US$55m / NOK 550m) over five years to build a brand-new Innovation Centre in Kuala Lumpur, which will focus on research and development using 5G, AI and IoT as well as supporting local digital start-ups.

The merger is due to be completed by Q2 2022 with Axiata and Telenor both holding equal ownership of 33.1% each.