VSS ON THE CARDS FOR CELCOM STAFF IF MEGAMERCER WITH DIGI.COM GOES THROUGH

A VOLUNTARY separation scheme (VSS) might be on the cards for Celcom staff, following the proposed consolidation with Digi.Com, thanks to the mega-merger between the parent companies.

Axiata Group Bhd, which owns Celcom, and Digi.Com’s parent company, Telenor Asia, have set in motion plans for a merger.

Axiata Group’s president and CEO Jamaludin Ibrahim recently told a town-hall meeting of Celcom staff that a VSS will be given to those who are interested.

A clip of the session sighted by The Malaysian Insight also revealed that there will not be a mutual separation scheme (MSS).

“Better still, we retrain you to do something else,” he added.

The consolidation, targeted for completion in the third quarter of 2019, will result in one of the largest telco businesses in the region, with a projected pro forma revenue to the tune of RM30 billion and net profit of RM4 billion.

On the domestic front, the potential merger between Celcom and Digi will give birth to the country’s largest telco company, which is projected to control up to 35% of the local market share.

According to a source, the town hall was held a day after the announcement of the merger was made public.

Prior to the session with staff, a briefing was also held for Celcom’s top management.

Celcom has about 3,000 employees while Digi has somewhere between 1,600 and 1,700.

There are concerns among Celcom staff, the source added, of duplications in positions in the merged entity, and that some of them would be made redundant.

Staff also feared becoming redundant if they do not take up the VSS offer and if Axiata cannot find roles for them in the merged entity.

“The moment they become redundant, then there is a way to remove them.

“So far, the message given to employees is business as usual and to do your best to achieve 2019 targets.”

Both companies will continue operations independently until the deal is closed.

Celcom and Digi are currently among the top three telcos in Malaysia with the other being Maxis.

If the deal materialises, Celcom will become a listed company as it will be injected under Digi.Com, which is already listed on Bursa Malaysia.

Meanwhile, the source said the composition of the board and top executives in the merged holding company and the local telco company might have already been predetermined.

However, Axiata previously said the appointments will be decided jointly.

Telenor Asia will hold 56.5% stake in the merged company while Axiata’s shareholding is 43.5%. The shareholding composition is based on the valuation of assets.

Axiata might also be eyeing a dual listing for the merged holding company on Bursa Malaysia and another major stock exchange overseas within the next few years.

Apart from the Malaysian entities, the mammoth merger will also consolidate Axiata and Telenor Asia’s regional businesses, except for Bangladesh, in which both have footprint.

Telenor owns Bangladesh’s leading cellular provider Grammenphone while Axiata controls Robi, which is No. 2 in terms of subscriber base.

Following the consolidation, the merged entity could tap into a customer base of 300 million in nine countries. Axiata currently has a footprint in six of the nine markets while Telenor has three.

The merged holding company could also realise a potential synergy of between RM15 and RM20 billion through the consolidation of assets, economies of scale and scope over the next five years.

Besides telco businesses, the merger will also include the tower businesses of Telenor Asia and Axiata’s edotco Group.

Edotco could see its inventory of operational towers more than doubling following the consolidation, propelling it towards its target of becoming the fifth largest tower business in the world by 2021, from the 13th largest.

THE MALAYSIAN INSIGHT

.