KUALA LUMPUR, May 6 — Local telecommunications (telco) giant Axiata Group Berhad confirmed today it is talking with Norwegian firm Telenor ASA about possibly merging their operations within Asean and South Asia.

Axiata said several issues have yet to be determined due to the involvement of several entities across nine countries, but the local giant opted for an early voluntary disclosure in the name of transparency.

"The Proposed Transaction aims to enable the new merged entity (MergedCo) to bring together Axiata and Telenor’s Asian operations unique combination of scale, competencies and vast experiences in leading and managing emerging and frontier markets.

"The Parties have also stated their stipulated intention to list the MergedCo on Bursa Malaysia and another major international exchange within the next few years.

"As a Global Champion, the MergedCo will now include a Malaysian Champion, a Global TowerCo, and the largest Innovation Center in this Region, all to be headquartered in Malaysia,” it said in a statement.

The shareholding will reflect the relative asset valuation, resulting in Telenor being the majority shareholder of the global MergedCo anticipated to own 56.5 per cent and Axiata will own 43.5 per cent with both parties acknowledging that this is preliminary subject to adjustments and due diligence.

The merged company will have a pro forma revenue of more than RM50 billion.

Its earnings before interest, taxes, depreciation amortisation is estimated to be more than RM20 billion while its controlled operating subsidiaries in nine countries will a combined total population of more than one billion people and 300 million customers.

The proposed transaction also has the potential to deliver up to around RM20 billion incremental value in synergies through consolidation of assets and organisations, economies of scale and scope, and complementary best practices.

Additionally, the portfolio of controlled telecommunication operations shall comprise six countries with number one positions, two countries with number two positions and one market with third position within their respective markets.

On the local front, the proposed transaction also intends to create a merger between Celcom Axiata Berhad (Celcom) and Digi.com Berhad (Digi) which will create the largest mobile operator in the country.

There’s also the potential to form a global top five mobile infrastructure player, by combining edotco Group Sdn Bhd, the existing Axiata TowerCo which is currently the 13th largest TowerCo globally, and Telenor’s Asian tower assets.

Axiata President and Group Chief Executive Officer Tan Sri Jamaludin Ibrahim said this was a momentous and historical occasion while allowing the merged entity to take the pole position in six countries.

"Additionally, we would also intend to create the largest mobile operator in Malaysia, one of the largest TowerCos in the world and the largest Innovation Centre in the Region,” he said in the statement.

Separately, Robi Axiata Limited, a subsidiary of Axiata operating in Bangladesh shall continue to be managed independently by Axiata post completion of this proposed transaction.

Morgan Stanley is acting as International Financial Advisor to Axiata on the Proposed Transaction.

Telenor and Axiata will work in good faith towards a binding agreement in relation to the Proposed Transaction by end of quarter three, 2019 following the due diligence exercise.

Should the parties agree to sign an agreement, the eventual transaction will be subject to approval by shareholders and regulatory bodies, amongst others.