This article first appeared in The Edge Financial Daily on May 30, 2019

KUALA LUMPUR: Axiata Group Bhd does not see major hiccups with regard to its merger talks with Norway’s Telenor Group.

Its president and group chief executive officer (CEO) Tan Sri Jamaludin Ibrahim said that both telco giants are currently undergoing due diligence processes and working towards finalising the binding agreements in relation to the proposed merger by the end of the third quarter this year.

Notably, he reiterated that Axiata is expecting to complete the binding agreement in the next three to six months, followed by another six to nine months to get approval from all the respective [parties] in all the countries in which they are operating.

“From now until then (binding agreement signing), it is to agree what we have agreed upon earlier, and other details that we are doing for due diligence. However, I do not expect any surprises,” Jamaludin told reporters after the company’s annual general meeting here yesterday.

He, however, noted that there may be some potential derailers in obtaining shareholder approvals, which include in all of its operating countries.

“We have to go through extraordinary general meetings. So, the shareholders, including Khazanah Nasional Bhd, Permodalan Nasional Bhd (PNB) and the Employees Provident Fund (EPF) and all other shareholders, will have the right to vote on this.

“The government of Malaysia, through all these companies, will also have the same rights,” he added.

Nevertheless, he reiterated that he is optimistic about the Axiata-Telenor merger as the company has got the “blessing from Khazanah”.

Jamaludin brushed off concerns that the exercise was akin to selling Malaysian interests to a Norwegian company, highlighting that the proposed merger is purely on the “spirit of merger of equals”, adding that “the best will run the entity”.

Staying committed to the Malaysian national agenda, the chairman of the new merged entity (MergedCo) is to be nominated by Axiata and will be a Malaysian.

“[For the MalaysiaCo], we already have agreed in writing that the chairman will be Malaysian, and [that the] majority of the board will be Malaysians. The CEO will [also] be Malaysian. And it will be run by Malaysians and [it] (Telenor) respects that,” said Jamaludin.

He said that post the proposed merger, both the companies will be able to share their networks, which will result in lower cost. The proposed merger will also enable the company to save some expenses in relation to capital expenditure and operating expenditure.

“But the question still remains if we will pass it to consumers, [which is] highly likely. But no promises until we come out with the business plan. But I can promise that we will offer affordable price to consumers and we will not take advantage of the situation,” he said.

Earlier this month, Axiata announced that it is in talks with Telenor to merge their Asian operations spread across Asia, including [the] mobile service business and telco towers, through non-cash transaction. Consequently in Malaysia, Axiata’s unit, Celcom Axiata Bhd, will merge with DiGi.Com Bhd.

It is anticipated that DiGi’s largest shareholder Telenor will own 56.5% of the MergedCo based on equity value, while Axiata will own 43.5% stake. However, both parties have acknowledged this could be subject to adjustments.