KUALA LUMPUR (May 6): The rumoured merger of Axiata Group Bhd's and Telenor Group's operations in Asia could enable the merged entities to leapfrog to top positions in terms of market share in countries which are involved in the corporate exercise due to a potential reduction in the number of competitors in the mobile telecommunication segment, AmInvestment Bank Bhd said today.
AmInvestment analyst Alex Goh said the investment bank also expects significant synergies and economies of scale given the elimination of resource duplication and operational redundancies.
"Additionally, with Telenor's proven track record and joint management role, we expect Axiata's discount to its SOP (sum-of-the-parts valuation) to be narrowed given the reduced exposure to overseas assets which bear higher risk.
"Nevertheless, such an extensive restructuring exercise could be hindered by each country's regulatory oversight, bearing in mind the strategic security and telecommunication issues which will be raised," Goh wrote in a note.
AmInvestment's note is in response to a report today in The Edge Financial Daily on the corporate exercise.
The daily, quoting sources familiar with the matter, reported that Axiata and Norway-based Telenor are in talks to merge their operations in Asia.
It was reported that 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.
Meanwhile, Axiata had earlier today issued a media invitation for a press conference at 3:30pm here today on a significant announcement by the company.
"Axiata cordially invites a journalist and photographer/camera crew from your publication to attend a press conference and briefing on a significant announcement today. The briefing will be conducted by Axiata president & group chief executive officer Tan Sri Jamaludin Ibrahim.
"We apologise for any inconvenience caused by this late notification and look forward to welcoming you (reporters)," Axiata said.