Robi to run independently despite Telenor-Axiata merger

In spite of the ongoing talks between Norway’s Telenor and Malaysia’s Axiata Group to merge its Asia operations, local network operator Robi will continue to be managed separately and independently.

In a press release issued by Axiata Ltd on Monday, it mentioned “Robi Axiata Ltd, a subsidiary of Axiata operating in Bangladesh shall continue to be managed independently by Axiata post completion of this proposed transaction.”

A Reuters report stated Telenor and Axiata Group are in talks to form a jointly-owned Asian telecoms company with close to 300 million customers, in a push to cut costs and boost growth.

If a deal is finalised, the merged business combining the two companies’ South Asian and Southeast Asian operations will likely be owned 56.5% by the Norwegian mobile operator and 43.5% by Axiata, they said.

“With its unique portfolio, the MergedCo 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,” Axiata said.

No cash would change hands as part of the merger, the companies added.

JUST IN: Malaysia’s Axiata (which owns Celcom) & Norway’s Telenor (which has a 49% stake in https://t.co/rA69DMBQxe Bhd) are in talks to create a new merged global entity “by combining Axiata & Telenor’s Asian operations within both their ASEAN and South Asia footprint markets”. pic.twitter.com/lKxuwsmFYd

— Sumisha Naidu (@sumishanaidu) May 6, 2019

The joint firm will have operations in nine countries with a total population of close to 1 billion people, including Thailand, Malaysia, Bangladesh, Pakistan, Myanmar, Sri Lanka and Indonesia.

The annual pro-forma revenue for the jointly owned company is estimated at $13 billion, with earnings before interest, tax, depreciation and amortization (EBITDA) of $5.5 billion before any savings are realized.

The companies expect the combined group to generate savings of around $5 billion but did not provide a breakdown of where those would come from. The two have overlapping businesses in several countries, including Malaysia, where they would merge Celcom and Digi, their respective units, under the new umbrella.

An analyst said the plan made sense but could run into regulatory hurdles tied to strategic security issues.

The new merged entity (MergedCo) of Axiata and Telenor will be formalised by end of third quarter next year - CEO Jamaludin Ibrahim pic.twitter.com/VVqoPbLD0F

— BERNAMA (@bernamadotcom) May 6, 2019

“Overall, we would be positive if this deal materializes as this could reduce the number of competitors, effectively enabling the merged entity to leapfrog to top positions in terms of market share in countries which are involved in the merger,” said Alex Goh, an analyst at AmInvestment Bank.

The holding company will be listed on an international stock exchange as well as on Bursa Malaysia, the companies said.

“I am confident this will create significant value for shareholders and will be beneficial to our customers,” Telenor Chief Executive Sigve Brekke said in a statement.

The companies aim to complete the deal in the third quarter of this year.

Citigroup is acting as financial adviser to Telenor on the proposed transaction. Morgan Stanley is advising Axiata.