MAY 23 — There are still many questions that need to be answered before Malaysians should get behind the proposed merger between Axiata and Telenor, the Norwegian telco company which also owns a 49 per cent stake in Digi.
The move, at least in the Malaysian context, is basically a merger between Axiata’s Celcom and Telenor’s Digi brands. Indeed, as media reports have convincingly argued, this deal will succeed or fail on Malaysian soil, if it can get regulatory approval and consumer buy-in here.
No one in their right minds will oppose businesses — including large ones — merging or consolidating.
One is even prepared to concede that monopolies or duopolies — which is what some have accused the still-hypothetical Celcom-Digi tie-up of facilitating — are necessary or inevitable in some cases.
Whatever the situation, such moves must be for the right reasons and all stakeholders — especially the consumers — must benefit, or at the very least not suffer from it. This is especially true for the telco sector, which provides the mobile and internet services that are all-important to our everyday lives.
One key issue that has to be addressed is reports that the new global entity, the so-called “MergedCo”, will see Telenor hold a majority equity interest of 56.5 per cent in it and Axiata 43.5 per cent.
To be fair, Telenor is not exactly a stranger in Malaysia. It has been around for a while and has shown much commitment to our market.
However, let us also not forget that the MergedCo will supposedly not only be the largest telco in operator in Malaysia and Asean+South Asia by revenue, but also potentially the new largest company in Malaysia by market capitalisation.
Will Malaysians be comfortable if such an entity is majority-held by a foreign company? No one is saying that this is necessarily wrong or bad — but the case for it must be made, above and beyond purely business considerations.
As I said earlier, mobile and internet services are a crucial part of our lives today — impacting not only our communications but also businesses, finances and even state as well as personal security. Concerns over the merger cannot hence simply be dismissed as populist or politicking.
As the last year has shown us: communication with the ground is key.
Next, we must also ask if some of the irritants Malaysian telco subscribers face daily will continue under the MergedCo.
For example: as a Celcom postpaid user, I have to pay RM38 a day to get 500MB of internet when I go to Indonesia for work. Why should this be so when Axiata owns a 66.36 per cent stake in PT XL Axiata? When Celcom users in Indonesia are basically using the shared services provided by its subsidiary?
Why do Celcom users need to fork out the same fee for a similar amount of internet data as a Maxis user pays?
Shouldn’t international internet plans for Celcom users in countries that Axiata has a presence in be cheaper compared to internet plans offered by other telco operators?
One really hopes that Axiata-Telenor will address whether their alliance will be able to address anomalies like this. Please do it before; and not after the fact.
This is in addition to the conundrums that mergers of this size invariably create, including whether or not costs and quality will rise or fall, or whether reducing the choices available to Malaysians is really what’s best for them.
These questions ought to be posed to Axiata-Telenor by both regulators and consumers.
The deal should not be allowed to go ahead until and unless we have cast-iron guarantees that it will deliver the best outcomes to all stakeholders.
It’s difficult of course for everyone to come out with the same amount of benefits, but a scenario where the “losers” keep losing is not sustainable, especially if the “losers” are Celcom and Digi’s subscribers.
A word on the regulators: a senior official at the Malaysian Communications and Multimedia Commission (MCMC) recently defined its role as ensuring fair competition within the industry.
The online gripes of Grab users — if these are anything to go by — makes one wonder where the MCMC was when the contentious acquisition of Uber’s Southeast Asian operations by Grab — which was in other markets brought to court — was allowed to take place.
It is also interesting that the Malaysia Competition Commission (MyCC) apparently feels that it does not have the prerogative to regulate or prohibit business mergers and acquisitions (M&A) that are deemed to be monopolistic in nature.
So what is the point of having such a body?
For its part, the government must ensure that the regulatory approvals process for this deal is done in a clear and stringent manner.
Whether or not it has the will to do so is another matter.
As I said at the start: there are too many unanswered questions about this deal.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.