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7 May, 2019 00:00 00 AM / LAST MODIFIED: 7 May, 2019 12:11:27 PM
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Telenor, Axiata in talks to merge Asian businesses

Robi will continue to be independently managed by Axiata
STAFF REPORTER, Dhaka
Telenor, Axiata in talks to merge Asian businesses

Norwegian Telenor Group and Malaysian Axiata Group Berhad are in talks to run a jointly owned telecoms giant in South and Southeast Asia to gain a bigger foothold in the region’s growing mobile phone market. The possible merger of their Asia operations under the identity MergeCo has generated considerable interest in Bangladesh as Telenor and Axiata respectively own Grameenphone and Robi, the largest and second largest mobile operators of the country.

Information so far disclosed from the two groups indicate that the MergeCo’s proposed operational model will not likely to impact the telecom markets in Bangladesh as Robi will continue to be separately and independently managed by Axiata.

Experts concerned with the telecoms sector in Bangladesh, however, hinted that some possible impact of the proposed merger would take place in the mobile tower management market in Bangladesh.

At present Malaysia-based edotco manages 1800 mobile towers of Robi, while Grameenphone manages its own towers. After the merger edotco could get all the towers of GP that could make monopoly in the tower industry.

“Axiata’s mobile operations in Bangladesh, Robi, aren’t part of the deal,” mobile operator Robi said in a statement yesterday. “As clarified in Axiata’s announcement in this regard today, Robi will not be part of the proposed merger and shall remain a direct subsidiary of Axiata post completion of the proposed transaction,” the statement added.

“The proposed merger will have no bearing on the Bangladesh market,” added Robi statement.

Grameenphone did not issue any statement. When asked, the operator referred to Telenor’s statement, saying they do not have their own one at this point.

About the proposed merged entity, Robi’s parent group Axiata in a statement said, “With its unique portfolio, the MergeCo will be one of the largest telecommunications groups in the region in terms of value, revenue and profit, and with a strengthened balance sheet to support aggressive growth and expansion.”

Abu Saeed Khan, a telecom expert, said, “I cannot comment right now as the talks have just begun. As per the statement, the final decision could come in the third quarter of the year.”

When contacted, Taimur Rahman, director of Banglalink, the third largest mobile operator in Bangladesh, has declined to make any comment on this. Telenor in its statement said both “the parties aim to create a leading, well diversified Pan-Asian telco with operations in nine countries with a total population of close to one billion people.”

“The MergeCo will have close to 300 million customers and become one of Asia’s largest mobile infrastructure companies operating approximately 60,000 towers across Asia,” said the Norwegian telcoms giant.

The proposed deal would combine the two companies’ South Asian and Southeast Asian operations, with the Norwegian mobile operator owning 56.5 percent and Axiata owning 43.5 percent, and no cash changing hands, the companies said.

In terms of geographical presence, Axiata has a wider footprint. While the two mobile service operators both have a presence in Malaysia, Thailand, Myanmar, Bangladesh and Pakistan, Axiata also operates in India, Sri Lanka, Nepal, Cambodia and Indonesia where Telenor is not present.

Once Norway’s state phone monopoly, Telenor first entered Asia more than two decades ago and derives more than half of its revenue from the region, according to Bloomberg.

The deal would continue a transformation for Telenor, which has sold its eastern European businesses and purchased a mobile operator in Finland to focus more on its Nordic home region. Telenor in 2017 also sold its unit in India after years of tough competition.

Axiata has seen similar troubles, having to exit Singapore and seeing an expansion in Pakistan checked.

Now, the proposed entity between the two groups will have its operational headquarters in Kuala Lumpur with the majority of functions and is planned to be listed at an international stock exchange as well as on Bursa Malaysia.

Pro-forma revenue and pre-synergy earnings before interest, taxes, depreciation and amortisation of the combined entity is approximately $13 billion and $5.5 billion.

The agreement will also aim to merge Malaysia’s Celcom and Digi with MergeCo, according to the statement issued by Telenor.

By uniting two strong organisations with complementary footprints and a merger of equals spirit, there will be attractive opportunities to capture substantial synergies preliminary estimated at around $5billion in total and support future investments and create shareholder value, said the statement.

The MergeCo will take an active role in accelerating technology transformation and digitalisation in Malaysia and across Asia, and plans to establish the Malaysian Research and Innovation Centre for state-of-the-art technologies such as 5G, Internet of Things and Artificial Intelligence.

“Today we announce that Telenor and Axiata are in discussions on joining forces in Asia, one of the most dynamic and innovative regions in the world,” said Gunn Wærsted, chair of Telenor Group.

President and Chief Executive Officer of the Group Sigve Brekke said, “I am confident this will create significant value for shareholders and will be beneficial to our customers.”

“The bottom line is we need the scale, we need the synergy, we need the balance sheet, we need the strong capabilities of both companies. If we can combine that it will be powerful,” Axiata group CEO Jamaludin Ibrahim told a news conference in Kulalampur yesterday.

Robi Axiata Limited is a joint venture between Axiata Group of Malaysia, Bharti Airtel, of India and NTT Docomo Inc of Japan. Axiata holds 68.7 percent controlling stake in the entity, Bharti holds 25 percent, while the remaining 6.3 percent is held by NTT Docomo of Japan.

GP is a joint venture between Telenor (55.8 percent), the largest telecommunications service provider in Norway having mobile phone operations in 12 other countries, and Grameen Telecom Corporation (34.2 percent, a non-profit organisation of Bangladesh. The other 10 per cent shares belong to retail and institutional investors.

 

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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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