Telenor and Axiata Shelve Asian Tie-Up Plan - Update
September 06 2019 - 6:12AM
Dow Jones News
By Dominic Chopping and Yantoultra Ngui
Telenor ASA (TEL.OS) and Axiata Group Bhd. (6888.KU) on Friday
called off a planned merger of some Asian assets, citing
"complexities" involved in the proposed deal, which people familiar
with the situation said relate to concerns over job losses and
foreign ownership in Malaysia.
The two companies had been working toward finalizing an
agreement within the third quarter, but "due to some complexities
involved in the proposed transaction, the parties have mutually
agreed to end the discussions."
Both companies didn't elaborate on what the complexities
were.
In May, both companies said they were discussing a possible
noncash merger of their Asian telecom and infrastructure assets
that would have created one of Asia's largest telecom companies
with a potential $12 billion in annual revenue. If the deal had
materialized, Telenor would have been the largest shareholder of
the combined entity with a 56.5% stake, with the rest held by
Axiata.
Axiata is Malaysia's largest telecommunications operator by
market capitalization. The company, which is 37% owned by the
country's sovereign wealth fund, Khazanah Nasional Bhd., operates
in nine countries including Indonesia, Sri Lanka, Bangladesh,
Thailand and Pakistan. Telenor is Norway's largest
telecommunications service provider and operates in five Asian
countries where Axiata is also present.
One of the people familiar with the process said worries that
the proposed merger may not get regulatory approval from Indonesian
authorities also weighed on the deal. Norway, which is not a member
of European Union, has been a strong advocate of the EU's plan to
phase out palm oil from renewable fuels by 2030 due to
deforestation concerns.
Indonesia, the world's largest palm oil producer and exporter,
has raised concerns regarding the plan and had threatened to
reciprocate by boycotting products from the EU.
Telenor and Axiata said they don't rule out the possibility of a
future transaction.
Shares of Axiata and DiGi.com Bhd., the Malaysian unit of
Telenor, will resume trading Tuesday. While Axiata was up 2.3% at
4.88 Malaysian ringgit ($1.16) before the trading halt, DiGi.com
was down 0.2% at MYR4.89.
Write to Dominic Chopping at dominic.chopping@wsj.com and
Yantoultra Ngui at yantoultra.ngui@wsj.com
(END) Dow Jones Newswires
September 06, 2019 05:57 ET (09:57 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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