KUALA LUMPUR (June 17): Axiata Group Bhd and Digi.com Bhd need more time to fulfil conditions that have been set out in the conditional share purchase agreement (SPA) signed on June 21, 2021 to merge their local mobile service operations.
The two telcos announced to the stock exchange that the duo have agreed to extend the current longstop date on June 21 under the proposed merger of Celcom Axiata and Digi.com’s mobile telecommunication network operations to Dec 31 this year.
The filings with Bursa Malaysia said that the duo have agreed to extend the date by which the conditions precedent as set out in the SPA are to be satisfied or waived in accordance with the terms and conditions of the SPA.
The extension came ahead of the June 30 deadline set by the government to conclude talks for telcos to sign up for 5G network contracts and to take up shares in Digital Nasional Bhd (DNB), the special purpose vehicle set up by the government to undertake the 5G roll-out.
To recap, Axiata and Digi.Com announced the proposed merger of Celcom Axiata and Digi.Com’s mobile telecommunications network operations on April 8 last year. This is the second merger between the two companies but it only involves the local operations this time round.
Under the proposed merger, Axiata and Telenor will each hold equal stakes of 33.1% respectively in the merged entity named Celcom Digi Bhd (CDB), which will continue to be listed on the local bourse, and will have a combined pre-synergy equity value of close to RM50 billion.
Axiata would receive cash consideration of approximately RM2 billion, of which RM1.7 billion would be from Digi.Com and the remaining RM300 million from Digi.Com’s parent company, Norwegian telecommunications giant Telenor ASA.
In November last year, the Malaysian Communications and Multimedia Commission said that it had formally received Digi.Com subsidiary Digi Telecommunications Sdn Bhd's application involving the proposed merger of Celcom Axiata and Digi.Com's mobile telecommunications network operations.
Share prices of Digi.Com and Axiata have been on a downward slope. Year to date, Digi has dropped 27% or RM1.18 to close at RM3.18 on Friday (June 17), valuing the telco at RM24.73 billion.
Axiata, whose president and group chief executive officer Datuk Izzaddin Idris stepped down from his role on May 31, has slid 34%, or RM1.41, since the start of the year to RM2.75. Axiata’s market capitalisation was at RM25.24 billion.