MCMC Approves Digi-Celcom Merger To Become The Largest Mobile Service Provider In Malaysia

Previously, the Malaysian Communications and Multimedia Commission (MCMC) was concerned the merger would or was likely to significantly reduce competition.

Cover image via theSundaily & Digi

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The Malaysian Communications and Multimedia Commission (MCMC) has approved the merger between Digi.Com Bhd (Digi) and Celcom Axiata Bhd (Celcom)

In a statement today, 29 June, MCMC said Digi and Celcom are the second and third largest mobile service providers in Malaysia, respectively, reported Bernama.

When the merger is finalised, both companies will become the largest market player in the industry, overtaking Maxis Bhd from its long-held position.

"As such, the MCMC had conducted a thorough assessment on the merger," it said.

On 1 April 2021, the commission issued a Statement of Issues to Digi and Celcom in accordance with the Merger Guidelines for their application for merger and acquisition dated 17 May 2019.

The government body was concerned that the merger would or was likely to significantly reduce competition.

In response, both companies promised their commitment to addressing the competition issues as highlighted by the commission.

"MCMC had considered the commitment offered by the applicants and is satisfied that it will significantly reduce the competition issues that will or may arise as a result of this merger," it said.

The merger is expected to complete within the second half of the year

For it to materialise, the proposed merger will now be subject to the approval from the Securities Commission (SC), Bursa Malaysia Bhd, and Axiata and Digi shareholders, reported Bernama.

The companies also need to meet the fulfilment of other customary terms and conditions.

"Upon completion, Axiata and Telenor (Digi's largest shareholder) will hold equal ownership of 33.1% each in the newly merged company, which will be named Celcom Digi Bhd, and will continue to be listed on Bursa Malaysia," they said in a statement.

Image via Digi

Once the merger is completed, MergeCo will be the name of their new entity

Digi and Celcom said they will provide better network quality and coverage as they will be primed to invest in network expansion to support the growing demand for data and digitalisation, reported The Edge Markets.

The joining of the two companies will better position MergeCo to drive 5G solutions, catalyse new growth opportunities for large enterprises and small and medium enterprises (SMEs), and attract and partner with global digital giants in support of the Jalinan Digital Negara (JENDELA) and MyDigital aspirations.

JENDELA and MyDigital are two national initiatives to strengthen the level of connectivity and transform Malaysia into a digitally-enabled and technology-driven nation, respectively.

To further improve the nation's digital potential, the companies will also invest up to RM250 million over five years to build a world-class innovation centre in Kuala Lumpur.

The innovation centre will benefit local research and development by leveraging 5G, artificial intelligence (AI), and Internet-of-Things (IoT) technology.

Image via The Borneo Post

Both companies announced their plan to merge in early May 2019:

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