Industry observers speculate on whether SingTel could at some point marry Axiata Group.
One such catalyst would be if SingTel were to divest its 35% stake in PT Telecom which at S$8.5 billion is already 4.5 times what SingTel initially paid. Putting aside any potential regulatory hurdles for now, a combination of SingTel and Axiata is not impossible sometime in the future.
In general, it could be argued that there are some merits for Axiata and Singtel to work together. However there are many considerations to take into account for this to happen. This includes the different visions and aspirations, strategic fit, operating model, existing partnerships and regulatory considerations, among others.
Several pertinent roadblocks to the hypothetical SingTel-Axiata merger such as would the Malaysian government allow Singapore or any other foreign party, to control Malaysia ’s second largest mobile operator.
More important, Temasek’s 54% stake in SingTel and the latter’s S$49 billion market cap relative to Axiata’s size as well as Khazanah’s 39% shareholding in Axiata mean that it would be Temasek and not Khazanah that would end up as the controlling shareholder of the merged entity.
Temasek’s holding in SingTel is worth four times that of Khazanah in Axiata. The foreign shareholding of Tier 1 telcos in Malaysia is capped at 49%.
Also what Axiata has is a abasket of prized regional telecommunications assets in a sector that Khazanah counts as a strategic and core holding.
Moreover, if the objective of a tie up is cost savings and operational synergies, a non equity collaboration to pool, resources could work just as well.
While Khazanah is willing to pare down some of its shareholdings and divest no core assets, but having a minority stake in a company it deems as a core holding is highly unlikely.
Even if the powers that be in Singapore and Malaysians are able to find a middle ground, there are still potential regulatory issues in India .
In putting across the SingTel Axiata merger, the complexities of executing such a merger that could results in an increased presence in 11 markets but see overlaps in four: Singapore , India , Indonesia and Bangladesh .
Questions arose whether there could be remarriage between TM and Axiata.
Industry observers reckon that in the longer term, TM could face substitution risks in retail business as even faster wireless technologies enable more compelling offerings. An integrated business could reduce this risk while allowing the merged entity to leverage its infra advantage – which is becoming a key differentiator for data.
Therefore, these could be potential merits in a remarriage. The discussions between TM and Axiata to give the latter access to the former’s high speed broadband network. It now seems that both are trying to build or add capabilities that do, in fact, make them an integrated player.
However, a reversal of the demerger, if it takes place may raise concerns about their management’s consistency.
Another observers opine that a re merger could send a message of inconsistency in strategic direction. Both TM and Axiata are doing very well on their own and had spilt not too long ago. If it is a matter of Celcom wanting access to a fixed line, a business arrangement can be made without a marriage.
That said, a re merger is really the decision of the shareholders as in the case of the de merger.
Should Axiata and TM re marry, there could once again be a risk of one business being marginalized over the other. Unless this issue can be convincingly sorted out.
One such catalyst would be if SingTel were to divest its 35% stake in PT Telecom which at S$8.5 billion is already 4.5 times what SingTel initially paid. Putting aside any potential regulatory hurdles for now, a combination of SingTel and Axiata is not impossible sometime in the future.
In general, it could be argued that there are some merits for Axiata and Singtel to work together. However there are many considerations to take into account for this to happen. This includes the different visions and aspirations, strategic fit, operating model, existing partnerships and regulatory considerations, among others.
Several pertinent roadblocks to the hypothetical SingTel-Axiata merger such as would the Malaysian government allow Singapore or any other foreign party, to control Malaysia ’s second largest mobile operator.
More important, Temasek’s 54% stake in SingTel and the latter’s S$49 billion market cap relative to Axiata’s size as well as Khazanah’s 39% shareholding in Axiata mean that it would be Temasek and not Khazanah that would end up as the controlling shareholder of the merged entity.
Temasek’s holding in SingTel is worth four times that of Khazanah in Axiata. The foreign shareholding of Tier 1 telcos in Malaysia is capped at 49%.
Also what Axiata has is a abasket of prized regional telecommunications assets in a sector that Khazanah counts as a strategic and core holding.
Moreover, if the objective of a tie up is cost savings and operational synergies, a non equity collaboration to pool, resources could work just as well.
While Khazanah is willing to pare down some of its shareholdings and divest no core assets, but having a minority stake in a company it deems as a core holding is highly unlikely.
Even if the powers that be in Singapore and Malaysians are able to find a middle ground, there are still potential regulatory issues in India .
In putting across the SingTel Axiata merger, the complexities of executing such a merger that could results in an increased presence in 11 markets but see overlaps in four: Singapore , India , Indonesia and Bangladesh .
Questions arose whether there could be remarriage between TM and Axiata.
Industry observers reckon that in the longer term, TM could face substitution risks in retail business as even faster wireless technologies enable more compelling offerings. An integrated business could reduce this risk while allowing the merged entity to leverage its infra advantage – which is becoming a key differentiator for data.
Therefore, these could be potential merits in a remarriage. The discussions between TM and Axiata to give the latter access to the former’s high speed broadband network. It now seems that both are trying to build or add capabilities that do, in fact, make them an integrated player.
However, a reversal of the demerger, if it takes place may raise concerns about their management’s consistency.
Another observers opine that a re merger could send a message of inconsistency in strategic direction. Both TM and Axiata are doing very well on their own and had spilt not too long ago. If it is a matter of Celcom wanting access to a fixed line, a business arrangement can be made without a marriage.
That said, a re merger is really the decision of the shareholders as in the case of the de merger.
Should Axiata and TM re marry, there could once again be a risk of one business being marginalized over the other. Unless this issue can be convincingly sorted out.
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