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PETALING JAYA: The proposed Celcom-Digi merger passed one of its biggest hurdles in securing the regulator’s approval for the creation of South-East Asia’s biggest telecoms company that will have control of half of Malaysia’s mobile subscribers.
But its creation also raises questions about fair competition, job cuts and there are suggestions that its approval could even be sweetener for the players to agree to take up 5G access.
The “no objection’’ notice from the regulator, Malaysian Communications and Multimedia Commission (MCMC), was secured yesterday after a second attempt by Axiata Group Bhd and Norwegian-Telenor ASA to merge their mobile units.
Axiata’s Celcom Axiata Bhd and Telenor’s Digi.com Bhd will merge to create Celcom Digi Bhd (merged entity), which will remain listed on Bursa Malaysia.
This approval also signals the industry consolidation from a big-four (Celcom, Digi, Maxis Bhd and U Mobile) mobile player landscape to two.
The question going forward is will Maxis Bhd, the biggest player by revenue market share as at first quarter 2022 at 38%, or even U Mobile consider a merger.
Size is relevant in a changing landscape more so in a 5G environment where none of the players will have their own 5G mobile networks and the reliance is on external access.
Experts believe the way to compete is with product differentiation and a big subscriber base helps.
“We also want to know that with the creation of a huge player that controls the mobile market space, will consumer protection in terms of pricing and product quality be rigidly monitored? Will the regulator ensure fair competition for the industry to grow?,’’ asked a telecoms executive.
Experts believe that with the “go ahead’’, there is nothing stopping the merged entity to venture across the region, especially in Indonesia where Axiata has a unit. Telenor has been eyeing the region’s most populous country for a long time.
The executive also pointed out the possibility of job cuts, given a merged entity may not need so many people and repetitive roles may be dropped in the new company structure.
Celcom has about 2,500 employees and Digi over 1,400. When combined, it is over 3,900 people.
“It is worrying, especially at this time when the world is headed for a recession and locally, inflation pressures are looming. Some form of job guarantee is necessary to allay fears,’’ he added.
However, at the point of the announcement on June 21, 2021, both Axiata and Telenor reiterated “their commitment to protect employee welfare with no forced retrenchments’’.