KUALA LUMPUR: The proposed merger of Axiata Group Bhd and Telenor ASA’s Asian operations could lead to competitive pricing and affordable products for consumers, said analysts.
A telco analyst told the New Straits Times the merger could result in a more competitive operating environment in Malaysia.
“I believe this can result in lower pricing for consumers once the Axiata-Telenor entity realises the cost savings and synergies expected from the merger.”
Axiata expects RM4 billion to RM5 billion in savings over five to seven years for Malaysia alone as a result of the synergies from the merger.
Analysts said concerns that the merger may not benefit consumers are unfounded as they would benefit from lower prices, better network quality and coverage and more innovative products from a stronger Malaysian entity, supported by well-established regional telecommunication leaders in Asia.
“Improved operating expenditure and capital expenditure efficiency will ease the pressure on the top line, especially for operations in mature markets like Malaysia where mobile penetration rates are high and prospects for service revenue growth are subdued,” an analyst was reported as saying.
TA Securities expects an increasingly competitive local operating environment resulting from the merger.
“Hence, we could foresee peers like Maxis Bhd and Telekom Malaysia Bhd, which have been pushing for convergence, working harder to defend their market share,” it said.
MIDF Research said in a note it is positive on the merger as the telecommunication industry is highly competitive.
“As such, having a sizeable presence would provide the group with certain competitive advantages such as economies of scale, better negotiating power in terms of equipment procurement, especially in the case of its (Axiata) Malaysian operation.
“It also provides the group with a stronger balance sheet to execute future expansion plans as the industry is capital-intensive,” it said.