Dr Mahathir queries Axiata-Telenor Asia merger on job concerns
KUALA LUMPUR (May 30): Prime Minister Tun Dr Mahathir Mohamad has asked for more details on the planned merger of the Asian telecommunications operations of Norway’s Telenor ASA and Axiata Group Bhd on concerns over potential job losses.
Telenor and Axiata, Malaysia’s biggest wireless carrier, announced the move earlier this month to create a company with 300 million customers in nine countries. A representative for Dr Mahathir’s office confirmed the prime minister’s concerns over job cuts after Bloomberg sought comment. The representative, who asked not to be named citing policy, didn’t provide further details.
The deal, which would be the country’s biggest since Dr Mahathir took office a year ago, is still progressing as planned despite the queries, according to people with knowledge of the matter, asking not to be identified because the information is private.
Telenor, set to own 56.5% of the new company, has said the potential “synergies” from the deal would amount to about US$5 billion. A representative for Telenor in Singapore wasn’t immediately available for comment.
Axiata shares extended gains to as much as 4.7% after the midday break, outpacing the benchmark index which rose 0.3%. The stock has advanced 18% this year, the best performance among the 30 members of FTSE Bursa Malaysia KLCI Index.
While Axiata will offer voluntary separation scheme to its employees in Malaysia, there would be no forced job cuts, Chief Executive Officer Tan Sri Jamaludin Ibrahim said in an interview on Wednesday. The company currently has about 12,000 employees in the region. The estimated “synergies” were based on the assumption that none of the staff will accept the retrenchment package, he said.
A final agreement is expected by the third quarter, but the companies have said that there’s no certainty that the discussions will result in an accord. They would aim to eventually list the company on an international exchange and in Malaysia.
Source: TheEdgeMarkets