Telenor boss Sigve Brekke stays active. Barely a month after splashing out $1.7 billion to buy a majority stake in Finnish mobile company DNA, he is embarking on a grander project. Scaling up in a broadly higher-growth part of the world, where Telenor already has operations spanning from Pakistan to Thailand, is more sensible than doubling down on mature European markets.
By Telenor's reckoning, the provisional merger unveiled on Monday would unite the sixth-and third-largest competitors by revenue and make them number one in the region. And the combined company would have 60,000 towers between them. Putting together Telenor Asia with Axiata, which has state wealth fund Khazanah as its biggest shareholder, would create a group with $13 billion of revenue and $5.5 billion in EBITDA. Assuming the newly listed entity were to trade at seven times projected EBITDA, a little higher than Telenor's 6.5 times multiple as per Refinitiv data, the enterprise would be worth nearly $39 billion.
Size often matters in telecom<\/a>, which helps explain the $1.6 billion added to Telenor's market value following the news. Joining forces provides clout when buying equipment and spreads the necessary investment costs to upgrade to new technologies such as ultra-fast 5G networks. The new Asian group would also become a top three operator in nine markets.
Malaysia, where Telenor envisions the bulk of the savings, may be a sticking point, however. Mahathir Mohamad's government, which is approaching its one-year anniversary, has made clear it wants to keep broadband prices down, a sentiment that could extend to mobile, too. The communications minister said days after taking office that high-speed internet should \"double the spend and half the price,\" which battered the shares of Telekom Malaysia. The Telenor-Axiata deal also would be the single most significant one to reach the country's new trustbuster. For the authorities, this Norwasian<\/a> transaction could be a wrong number.
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