KUALA LUMPUR, April 8 — Celcom Axiata Bhd, a unit of Axiata Group Bhd, is merging with Digi.Com Bhd, business news site The Edge Markets reported today citing sources familiar with the matter.
The move could potentially create the biggest mobile service provider in Malaysia, it said. Talks about the merger had previously raised concern that it would squeeze competition.
The merger between the two would involve operations in Malaysia, according to The Edge Markets, unlike the previous plan in which Axiata and Digi.Com’s Norwegian parent Telenor ASA had tried to merge their operations at the regional level.
“The merger will bring in financial benefits, although each party will not hold a controlling stake in the merged entity the merger should be evaluated in [terms of] the financial benefits,” a source was quoted as saying.
Some analysts have described the move as “logical”. The business news site citing observers said the mobile service industry now requires large capital expenditure in a low growth era.
A merger could achieve economies of scale necessary to cope, they were quoted as saying.
Trading of Axiata and Digi.Com’s shares was suspended this morning pending an announcement.
All structured warrants relating to Digi.Com would also be suspended at the same time, according to separate filings with the stock exchange this morning.
Axiata is expected to hold a media briefing this afternoon, The Edge Markets reported.
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