GP may go in, Robi to remain outsideParent cos of GP, Robi in merger talks

Norwegian Telenor Group, parent company of Bangladesh’s leading mobile operator Grameenphone, and Malaysia-based Axiata, parent company of another mobile operator Robi, are in negotiation to merge their Asia operations, keeping GP in and Robi out of the merged company.
Both the groups in a statement on Monday announced their engagement in talks on a potential non-cash merger of their telecom and infrastructure assets in Bangladesh and eight other Asian countries to serve nearly 300 million customers using approximately 60,000 towers.
To this end, Telenor and Axiata after a successful negotiation would form a ‘MergerCo’ to have operational headquarters in Malaysian capital of Kuala Lumpur, said a Telenor press release.
Robi, however, in a statement clarified that it would not be part of the proposed merger and would remain a direct subsidiary of Axiata’s post completion of the proposed transaction with Telenor.
In Bangladesh MergeCo will own majority shares (55.8 per cent) of Grameenphone, a listed company, with minority shares (34.2 per cent) to be held by local Grameen Telecom and general investors (10 per cent).
Telenor said both the parties acknowledged that this was preliminary discussion subject to adjustments and due diligence.
‘It is anticipated that Telenor, based on equity value, will own 56.5 per cent in MergeCo while Axiata will own 43.5 per cent.’
Telenor said: ‘There is no certainty that these discussions will result in any transaction agreement between the parties.’
MergeCo would have its operational headquarters in Kuala Lumpur housing the majority of functions, and would be listed at an international stock exchange as well as on Bursa Malaysia.
In Malaysia, the intention is to merge Celcom and Digi, with MergeCo as the majority owner.
Robi, which is jointly owned by Axiata, Airtel and NTT Docomo, would continue its operations in Bangladesh separately and independently managed by Axiata, the Robi clarification said.
Bangladesh Telecommunication Regulatory Commission chairman Md Jahurul Haque told New Age on Monday that the he was yet to receive any formal communication from the operators over the issue.
Grameenphone has recently been declared as significant market power in Bangladesh that resulted in regulatory sanctions to curb its growth.
By uniting Axiata and Telenor with complementary footprints and a ‘merger of equals spirit’, there will be opportunities to benefit from synergies estimated at around $5 billion, the companies said.
This would also support future investments and create shareholder value, they said.
MergeCo would take an active role in accelerating technological modernisation and digitization in Malaysia and throughout Asia, and plans to establish the Malaysian Research and Innovation Centre for developments such as 5G, Internet of Things (IoT) and artificial intelligence.
Telenor’s Asian footprint covers Thailand (Dtac), Malaysia (Digi), Bangladesh (Grameenphone), Pakistan (Telenor Pakistan) and Myanmar (Telenor Myanmar). Axiata has operating companies in Malaysia (Celcom), Bangladesh (Robi), Cambodia (Smart), Nepal (Ncell), Sri Lanka (Dialog) and Indonesia (XL), and tower business Edotco.
Pro-forma revenue and pre-synergy EBITDA (earnings before interest, tax, depreciation and amortisation) of MergeCo are approximately $13 billion and $5.5 billion respectively.