Celcom Digi Berhad will remain listed in Kuala Lumpur, in line with a preliminary agreement announced in April.
The implied enterprise deal value is based on Digi's share price of 4.18 ringgit as of Friday, a source familiar with the deal said.
The deal comes at a time when mobile operators are facing pressure on profits in a challenging industry environment. Celcom Digi's main competitor would be the largest telecoms operator in the country, Maxis Bhd.
"The merged entity will be commercially stronger and more resilient with greater scale to invest in improved network coverage and quality," Axiata and Telenor said.
"(It) will also have greater scale which will allow it to drive 5G implementation in the consumer segment in the future," Axiata said in a stock exchange filing.
The transaction, which is subject to regulatory and other approvals, is expected to be completed by the second quarter of 2022.
As a result of the deal, the companies plan cost cuts and savings on capital expenditure with a net present value amounting to about $2 billion, Telenor said in a statement.
Axiata said it entered into the agreement with Digi, where 100% equity interest of Celcom Axiata, would be transferred to Digi for a total consideration of 17.76 billion ringgit ($4.3 billion).
Digi said the merger would result in Axiata receiving newly issued shares in Digi and a cash consideration of 1.7 billion ringgit from Digi as new debt in the merged company.
"As part of an ownership equalisation in Digi under the terms of the merger, Axiata will also receive close to 300 million ringgit from Digi's largest shareholder Telenor," it said in a statement.
Axiata said last Tuesday it hoped to seal the merger deal within days or a week having completed due diligence.
Morgan Stanley was the sole international advisor to Axiata on the deal, while Citi advised Telenor.
($1 = 4.1480 ringgit)
(Reporting by Terje Solsvik in Oslo, Liz Lee in Kuala Lumpur and Anshuman Daga in Singapore; Editing by Christopher Cushing, Stephen Coates and Emelia Sithole-Matarise)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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