Celcom-Digi merger almost a done deal

The Celcom-Digi merger is just a step away from completion, but the heat is on Axiata Group Bhd as its credit profile is likely to weaken.

The merger will erode the earnings quality of Axiata, and an acquisition-fueled increase in leverage adds further pressure to Axiata’s credit profile, said S&P Global Ratings.

The ratings on Axiata (BBB+) are on CreditWatch with negative implications to reflect a likely downgrade to BBB, following the substantial completion of the Celcom-Digi merger, it said.

Axiata’s weaker earnings quality will translate into a commensurately lower debt tolerance at the BBB+ rating level.

S&P believes the company will breach this tighter leverage threshold. By its estimates, Axiata’s debt-to-earnings before interest, taxes, depreciation and amortisation (ebitda) ratio will rise to 2.7 times to 2.8 times in 2023, from about 2.2 times in 2021. This assumes that all the acquisitions are complete and that the Celcom-Digi merger proceeds.

It said Axiata’s leverage has risen following its series of acquisitions. Over the past 12 months, the company has undertaken close to RM9bil worth of acquisitions.

This rising debt comes amid a likely decline in earnings quality. The merger will weaken Axiata’s earnings quality, mainly due to the loss of direct control over cash flows from wholly-owned Celcom, which has contributed about a quarter of Axiata’s ebitda.

Its view is that, post the transaction, Axiata’s adjusted ebitda, which will include dividends from the merged entity Celcom-Digi, will become more volatile.

That is because dividends are likely to fluctuate with Celcom-Digi’s other cash flow needs, such as capital expenditure.

Last week, the Securities Commission gave its blessing to the merger between Axiata’s wholly owned unit, Celcom Axiata Bhd and Telenor ASA’s Digi.com Bhd


MARKETING Magazine is not responsible for the content of external sites.

The APPIES is an annual event that presents a rare opportunity for creative, media, digital and marketing agencies or brands to present their best campaigns to the industry.

This is the only event where Live Presentations meets Live Judging.

Similar to TED Talks, The APPIES is the chance for great presenters with outstanding work to show it off to some of the industry’s most important industry leaders.

This year’s winners will receive Gold, Silver or Bronze trophies for 21 categories, and 6 special Best of Best categories (red trophies) that require no submissions!

Campaign entries must have run between June 2023 to May 2024

Submissions Deadline
30th June 2024

APPIES Festival – Judging & Presentations
11th – 12th July 2024 (Malaysia)

 

Download Event PDF
Submit Entries Here




Subscribe to our Telegram channel for the latest updates in the marketing and advertising scene