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Celcom and Digi to resume merger talks following 5G SPV announcement?

As Malaysia aims to roll out 5G by end of this year through a government-owned Special Purpose Vehicle (SPV), it appears that Celcom and Digi have resumed discussions for a possible merger. This was reported by The Star based on their sources.

Both Telenor and Axiata have previously announced plans to form a merged entity in 2019, however, the plan was called off several months later. The merger between the two telecommunications groups was supposed to include several subsidiaries in 9 countries which has a combined population of more than 1 billion people.

It was reported there’s a renewed interest to merge both Celcom and Digi, after the government revealed Digital Nasional Berhad (DNB), which is tasked to roll out Malaysia’s 5G network. The SPV will be the single-entity to manage the 5G spectrum and infrastructure deployment nationwide. With this approach, telcos won’t be burdened by infrastructure investments and they can offer 5G services through a wholesale agreement with DNB.

Because of this arrangement, there won’t be any differentiation in terms of network coverage between telcos, and they are forced to compete on pricing and service offering. It is said that the situation may encourage consolidation to put them in a competitive position.

The Star’s source said that it isn’t clear how advanced these merger talks are at the moment but both parties would have something to offer. It is also said that it is about meeting halfway to see how they can match each other’s needs. Although 5G is handled by the SPV, the individual telcos in Malaysia are tasked to expand the 4G network and to optimise their respective spectrum under the JENDELA plan.

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If the merger does take place, the new Celcom-Digi alliance would form Malaysia’s largest mobile network. At the moment, Maxis leads in mobile subscriptions with 37% market share, followed by Digi at 34% and Celcom at 29%.

[ SOURCE ]

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Alexander Wong