Malaysia’s Axiata says Telenor merger could still happen


KUALA LUMPUR — Malaysian telecommunications conglomerate Axiata says abandoned plans to merge its Asian operations with Norway’s Telenor could still be revived, but in the meantime it will consider opportunities elsewhere.

“We are still friends,” Axiata President and CEO Jamaludin Ibrahim told Nikkei Asian Review in an interview this week. “We can always re-look at this in the future, maybe in a few months’ time.”

The proposed merger, which was called off by mutual agreement last month with both companies citing unnamed “complexities,” would have created the biggest telecoms operator in south-east Asia with 300 million customers across nine countries and $13bn in annual revenues and delivered about $5 billion through cost synergies and economies of scale.

Axiata, Malaysia’s second-largest telecommunications provider with a market capitalization of over $9 billion, is 37%-owned by Malaysian state fund Khazanah Nasional.

The company operates mobile services in Malaysia, Indonesia, Sri Lanka, Bangladesh, Cambodia and Nepal. Telenor, meanwhile, operates in Thailand, Malaysia, Myanmar, Bangladesh and Pakistan, with 53% of its revenue last year coming from Asian markets.

Refusing to elaborate on how future talks could bring the two companies closer together, Jamaludin said neither party wanted to completely close the door.

“Both parties agreed that we basically answer ‘no comments’ to the reason of the split,” Jamaludin said. “We do not want any of this to affect directly or indirectly, influence other mergers and acquisitions that we plan to do or influence our ability to redo the whole merger.”

Looking ahead, Jamaludin said Axiata was actively looking for merger and acquisition opportunities in Malaysia, Indonesia and Sri Lanka.

“We have always been looking at consolidation (especially) in Malaysia, Indonesia and Sri Lanka,” Jamaludin said.”We are not desperate but we believe there should be some consolidation, so the important point is it doesn’t have to be us.”

Jamaludin said that with the growth of the telecommunications industry globally expected to plateau in the next three to four years, the incentive to consolidate was increasing.

Declining to add to speculation that Hong Kong’s CK Hutchison Holdings had commenced discussions on a possible merger between its Indonesian business and XL Axiata, Jamaludin “there is nothing new about it.”

“We have been talking to some parties and practically all the operators (in Indonesia) have been talking to each other,” he said. “But nothing is in a serious stage.”

Jamaludin said Axiata had no qualms doing business with China’s Huawei Technologies when it came to rolling out its 5G network, despite U.S. actions against the telecom equipment provider.

“Right now, for us, with relation to Huawei, it is business as usual,” Jamaludin said. “We are still open to Huawei and the relationship is very good.”

Huawei currently provides about 60% of Axiata’s communications equipment, with other suppliers including Ericsson, Nokia and ZTE making up the rest.

Blacklisted by the U.S. after the White House labeled it a tool for espionage by Beijing, Jamaludin said he believed the Chinese tech giant could withstand the impact the sanctions, although there was “of course, a limit how long they can supply.”

In talks with other equipment suppliers to fill possible gaps in the event that Huawei’s equipment supply chain was disrupted, Jamaludin said implenting such a back-up plan would inevitably lead to cost increases.

Huawei announced its first Malaysian 5G contact last week, inking a formal agreement with Axiata competitor Maxis to provide 5G radio equipment, services and knowledge to build the country’s first ultrafast network.

Jamaludin said Axiata is also eyeing venture in Pakistan for its telco business, but not in the medium-term.

“If we find one dollar to spend, I won’t spend the dollar on a new country. I will (instead) spend the dollar on enterprise or mobile expansion on 4G, 5G, or on home broadband in my existing footprint.”

As for its tower business parked under the edotco Group, Jamaludin said that while Axiata was not actively exploring opportunities in India, it was looking at other expanding in other countries across the region.


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