This research note discusses the rationale for Telenor's and Axiata's proposed mega-merger and its implications.
- 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
Achieving digital scale and scope is important for a smart telco