Tech News

Axiata-Telenor JV to induce competition in pricing, network

The proposed merger of Axiata Group Bhd and Telenor ASA’s telecommunication and infrastructure assets in South Asia will signify the importance of scale for telco industries to compete in data pricing, network capacity and spectrum holdings.

According to Fitch Ratings Inc, the merged entity (MergeCo) will command better pricing power, with stiff competition resulting in telcos seldom being able to price data to capitalise fully on the rapid growth in data consumption.

The data consumption currently averages about 11GB per user a month, up from 7GB a year ago.

“The enlarged entity would become the largest domestic mobile operator, with a combined market share of over 50%, and 35% of total revenue share across the domestic fixed and mobile sectors, surpassing fixed-line operator Telekom Malaysia Bhd,” the rating firm stated in a report yesterday.

Fitch highlighted that continuous investment is needed to maintain the growth in the highly competitive Asian telecommunication market.

Earlier this week, both companies announced a preliminary discussion to merge their assets in nine Asian countries.

The MergeCo, which will see Telenor having a 56.5% stake with Axiata owning the remaining 43.5%, will create the country’s largest cellular operator with 21 million handphone subscribers in Malaysia and 267 million customers in nine countries.

Fitch stated that the proposed deal will reap most synergies in Malaysia, as both parties have an equal presence in the local market. Telenor — a Norwegian firm — has a 49% stake in Digi.Com Bhd.

The limited geographical overlap in other markets, including Indonesia, Thailand, Sri Lanka, Pakistan, Nepal, Myanmar, Cambodia and Bangladesh, would offer cashflow diversification and regional exposure to 300 million subscribers.

The deal, however, excludes Axiata’s Bangladeshi operations held under Robi Axiata Ltd, which will be continued independently by Axiata.

Meanwhile, Fitch said changes to the parent-subsidiary relationships of Axiata and its 66%-owned Indonesian subsidiary, PT XL Axiata Tbk, and Telenor and Total Access Communication pcl (DTAC), the third-largest Thai mobile operator, could prompt re-assessments of the level of parental support for these subsidiaries.

Axiata-Telenor JV to induce competition in pricing, network

Have a comment? Type it below!

Back to top button

Adblock Detected

Hi, kindly remove your adblocker to view this page.