Word on the street has it that both Axiata Group Bhd and Digi.com Bhd are set to build the biggest Malaysian service provider together.
Within the mobile service industry, there is a need for large capital expenditure. Since the high-growth era is gone, analysts stated that mergers are a logical step to bring financial benefits and achieve better economies of scale. Therefore, this could be an advantage for both companies.
Just this morning (Thursday, 8th April), the share trading for both Axiata and Digi was suspended, pending an announcement. This suspension fuelled speculations in the market as both Axiata and Digi’s parent, Telenor, were previously negotiating about merging their operations in Asia but failed.
According to separate filings with the stock exchange, the companies stated that all structured warrants associated with Digi would be suspended together as well.
Previously, Axiata and Telenor formed a mega-merger plan in May 2019 where they attempted to create one of the biggest telecommunications groups that would expand to over one billion individuals in nine countries. Originally, the plan was to combine a merged entity with Telenor holding 56.3% and Axiata with just 43.5%. However, as mentioned before, the merger was canceled a few months later.
Additionally, analysts have mentioned that mega-mergers of regional operations are much more convoluted because regulatory approvals are a requirement.
Apparently, Axiata will hold a media briefing this afternoon.
Source: The Edge Markets.
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