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Introduction

This research note discusses the rationale for Telenor's and Axiata's proposed mega-merger and its implications.

Highlights

  • A trend of market consolidation is evident in most Asian markets, driven by tougher price competition and slowing subscription growth. This announcement supports Ovum’s long-held view that having three players that control at least 80% of the total market is the most viable setup in the long term.
  • 5G is a clear catalyst behind the mega merger. It is not just 5G's high rollout costs, build complexity, and long tail of revenue that is bringing a sense of urgency to M&As, but the fact that 5G will increase the differentiation between operators competing for top spots.
  • There are few telcos that can compete with traditional OTT service providers in digital business, and those that aim to do so will need scale and scope. A merged Telenor-Axiata would have a much wider digital footprint in the long run, as Ovum expects it to grow interoperability between various services to create a regional payments system.

Features and Benefits

  • Evaluates the proposed Telenor Axiata mega-meger.
  • Explains the rationale behind the merger.

Key questions answered

  • How would the merger better position a combined company in Asia?
  • What scale advantages and synergies are expected from the merger?
  • How would the merger better position a combined company in 5G?

Table of contents

Ovum view

  • Summary
  • Achieving digital scale and scope is important for a smart telco

Appendix

  • Further reading
  • Author