In an interview, Brekke, now Telenor Group president and CEO, acknowledges the potential fallout in such a circumstance given that the Malaysian aspect of the merger is the “cornerstone” of the proposal.
“That’s a very important part of the deal, I would say. The whole deal has Malaysia as the cornerstone and to not do Malaysia or not do the rest of Asia, then the deal would look very different,” he says.
Indeed, it would be a deal breaker should Malaysian regulators not assent to the merger between the telcos.
“[Without the Malaysian merger], it would be a very different deal so I would say yes, the deal in its current scope would be off,” Brekke tells The Edge.
He confirms that Telenor has met with some local authorities, who have so far been in a “listening mood”, although he declines to be specific. “We have had dialogue with the relevant authorities,” he offers.
The proposed merger of Telenor’s Asian operations with Axiata Group’s will give birth to the region’s largest telco by revenue. Called MergedCo for now, it would operate across nine countries, serving a customer base of 300 million out of a combined one billion population.
However, of the nine countries, Malaysia is the only major geographical overlap between both parties, as Axiata’s subsidiaries are in Sri Lanka, Nepal, Cambodia and Indonesia while Telenor’s are in Bangladesh, Myanmar, Pakistan and Thailand.
The proposed merger was announced on May 6 and should negotiations bear fruit, both parties expect to put ink to paper in about three months.
Getting the green light in Malaysia will make a big difference to the dynamics of the deal. From the RM15 billion to RM20 billion in synergies expected to be unlocked over five years from the merger, half will come from the Malaysian integration.
The key concern for Malaysian regulators — particularly the Malaysian Communications and Multimedia Commission (MCMC) — is that the merger would involve two of the so-called Big Three of the domestic telecommunications industry.
Telenor is the largest shareholder of Bursa Malaysia-listed Digi.com Bhd, in which it owns a 49% stake, while Axiata wholly owns Celcom Axiata Bhd.
Merging both would create Malaysia’s largest telecoms player called MalaysiaCo, which would command about half the cellular subscription market.