Business Combination

May 6, 2019

Ladies and gentlemen, thank you for standing by and welcome to the AxialTech Group's conference call. Throughout this presentation, all participants are in a listen only mode. There'll be a presentation followed by a question and answer session. Firstly, 2 housekeeping reminders. During the presentation and kindly avoid using wireless headsets. Today, the conference call will be hosted by Tansry Jamaluddin, Group CEO and Vivek Sood. Group CFO. I would like to turn the conference over to speakers. Please go ahead. Thank you. Thanks for joining us. My name is Jamal and Group CEO for Zieta. Guess today, we are announcing the Mega merger between the two companies. The angel is the injection of the excess of 2 companies, we took a new much quantity. Let me just go back a little bit. If you can look at Slide 2, This has been a vision for the company. We want that's been a history. The T. V. Merger is $2208. That we've been a distinct company. We've created an original champion. And as of today, we are moving into 3.0 into a new generation digital company. If you look at a point slide, this has been our triple cost strategy. How we want to transform the digital telco into a broadband company a converged company, how we want to transform the digital businesses into 3 unicorns and how we want to transform infrastructure into a global scale company. Digi merger, I will go straight to the merger. This is a very heavy chart, the next chart. Yes. Well, the Zoet's looking at value is a 3 component from a national perspective. What does it mean for the shareholders protecting the commercial side and how do we work throughout the business? From the national perspective, we are creating 4 entities. One entity is a global entity international much growth which is the basically the new entity that we've talked by injecting title issue assets and most of Avesa assets effectively all minus India, Robbie, and ADS, which is what I was saying later on. So that will be the Internet much goal. For 4 month revenue of this company will be BRL50 1,000,000,000 EBITDA BRL20 1,000,000,000 and BRL4 1,000,000,000. Is arguably the largest telco in the region, but that's really the largest in terms of revenue, but very close in but also in many years too. The country will be operating in 9 countries and 6 being number 1. So that's the International MuchCo. The 2nd company will be the merger of Cellcom and CG that merged company will have a pro form a revenue of $14,000,000,000 and EBITDA of $5,000,000,000 and obviously will be the largest in Malaysia. I will explain more about the later on. The global telco, the telco itself is the 30 largest in the world, But if you cut out the rest of the towers in Telenor Asia's footprint in our over the remaining towards our own operation potentially, it could be the top 5 budgets in the world. Now that might take obviously, 1, 2 even 3 years, but from a directionally that could be done much earlier compared to what we could have done otherwise. Now one of the other features of the deal is to create the largest innovation center where we will invest to the tune of average of BRL100 1,000,000 per year. There will be focus on new technologies, IoT, artificial intelligence, robotics, so on. And we believe that these deals were commercially attractive will also support the national aspiration of the country. Now, the trust on the wholesale business will be more on what does it mean to the shareholders, right? If you look at a center, it's like say the mega merger of its kind. The biggest one is that the synergy that we're looking at will be to the tune of $15,000,000,000 to $17,000,000,000 regain combined for the merged company. So our share will be accordingly the 43.5 percent of that amount. What is interesting also, the company will have a firepower to potentially, big large headroom that we can fund our mobile, especially Indonesia, broadband, and other non traditional businesses that we had wanted to do. And related to that, on top of that, rather, we expect the free cash flow to be very significant and allow us not only the funding, but to give a learning to it or dividends to our shareholders. The last point is a situation to the previous chart where once combined we will accelerate the ARDSA 3.0 to 4.0 becoming effectively global champion. Now leaks while the shelving, as you can see in the announcement, it is telling us 50 6.5 and our delta 43.5, the increased concept of running this business is the period of merger equals. Basically, we agreed that we will form a company as mentioned earlier, as a merchant entity, but more importantly, we will run this profession is an important part of the company. So the broad professional bond, although majority pointed by Telenor and the rest are set out to reflect the shareholders, but it will be run not subservient to any other operations. It will be done and decided everything by the board of this company. And related to that, the board and all management positions within the group well, especially the deal, much coal and the Malaysia coal, which is the much or merger of Central Digi what will be determined jointly, both the board and management and with the concept of the best with the best bed we need to have the best person for the job and to be decided jointly. It is a vision that all opcoats will continue as is. In other words, all the CEOs and CXOs, all the remaining operating companies there will not be we don't expect any change. The foreign chart shows the the pro form a revenue and profit number of customers to be able to merge. As you can see from this chart, by combining the 2 operations or assets and assets, we will leapfrog to be number 1, the largest in the region. Which is regionally defined as Southeast Asia and South Asia. In a profit standpoint, we will be definitely top 3 in the region and customers from 3. Now for Malaysia, the next chart, the combined revenue pro form a will be $14,000,000,000 regain, and EBITDA $5,000,000,000 regain. With a total customer of JPY 21,000,000,000 JPY 21,000,000,000. But of course, in reality, there will not 1,000,000,000, but it's not going to be because are because of the duplicates in the customer base. So, but still, we expect this to be the largest If you look from a converge perspective, in other words, you include time and time telecom, we expect to be the pro form a of roughly 35 percent of the market revenue market shares. The next chart is apart from the international launch code before the new nation champion of which could be formed, we also will create the top 5 largest global telco as mentioned earlier By combining E dot gov, which has about 19,000 sites and about by 12,000 or 13,000 operator sites. You combine it with Terrero Asia. If you manage to recover, it will be roughly to the tune of fifty-sixty. Now, if you look at the total power that we have, it's a combined, it's actually about 80,000 But we do assume that some for whatever reason might not be able to count down. And therefore, the more positive number of 50 to 60. From the investor perspective on the next slide, Big. Thanks a lot. The big picture of this deal, as mentioned earlier, is a very strong balance sheet. To fund growth in the Lucha, Thailand, and many other new areas that we want to go into, especially home. By increasing the headcount, the headroom, 10 headroom or the cash flow. The second advantage is of course related to the first we can fund our new deal growth of the company, but the company itself is in the right area on right geography where it still grows less. The 3rd advantage of course is the hostility and avoided especially when you look at the cost in Malaysia, where combining DG and Circular, we do see huge synergy because of cost synergy and avoidance. And then of course, the sharing of best practices between the two companies, which of course, we have different business models, but the idea is to pick the best of both worlds. Last but not least, we believe that, we will be extremely attractive to extract best people in the industry in this region and also to retain them. The next slide shows the cellular group, which most of you are familiar. And let me I'll keep the equity story because that will be kind of mentioned earlier. But let me let me say it on for a while. So the equity story, the plan is for the virtual with the next one, 2 or 3 years because we cannot determine that the years read will be listed So a vision company, telecom will be injected in Digi. Therefore, we'll be listed in large significantly a large company. And of course, eventually, Gopa, the tobacco will be lifted So there's 3, 4 chance we're going to create 3 of which might be listed company. And you can see the slides we're talking about pretty big. The synergies are very big. I mentioned about the firepower. And last but not least, it's a pretty unique portfolio. In fact, I can't imagine any portfolio comes close to us in part of the world is extremely unique portfolio. The next chart shows a 5 core communities area. This is where the $50,000,000,000 to $20,000,000,000 come from is the next chart. Yes, the predominantly will come from Malaysia, where the combination of CapEx avoidance because of network, the spectrum, the OpEx efficiency, of course, leads to the core unit area. And procurement also is envisage that we will combine our procurement team and will be highly centralized We mentioned by tower, the market, the value of lease because of the tower will be significant And of course, the issue will be consolidated. They have the issue with Bank of America. They have also won in Singapore. You will be consolidated into 1 and maybe 2 still but for sure consolidator and of course the benefit of wholesale. That's how we are quantifying. The next slide shows the other benefits or the other areas of villages, which we have not quantified from analytics to the softwares center that we are, we are just ahead already, our enterprise and so on and so forth. The last chart shows what the NSE would look like. There will be 9 companies, 6, number 1, 2, number 2s and 3, number 3. And in summary, the last slide, maybe I can ask Vivek to talk about the summary, the I mean, this is just the key features of the announcement we've made. So, which is basically the first one is clearly the global champion combining the operations of the North Asia and Asia, excluding Ruby, our intention is to list the small school in BOSA and another major Stock Exchange to create a global power company set up a regional innovation center in Malaysia which Camshi talked about potential synergies of 1000000000 to 1000000000 the shareholding reflects the relative value of the assets, which is split as 56.5 for Edenor and IXIATA, the loan 43.5. And we expect the binding agreement to after the due diligence process to be completed by quarter 3, 2019. Now this is both more an estimate plan, but the intention would be to do that based on these timelines. Yeah, that's it. So then we can open the call for Q And A. Thank you for that. Star 1 on your telephone and wait for your name to be announced. We'll take the first question from Piyush Chaudhry from HSBC. Your line is open. Please go ahead. Yeah. Hi. Good afternoon, and congratulations for this Migadel. Firstly, if you can talk about the timelines or and the regulatory milestones which we should consider, particularly in Malaysia, Indonesia markets. And Secondly, she can dwell a little bit more on how the valuation ratio was arrived at. And thirdly, if I may, you've talked about the listing of the merged entity in international market. So who will sell the shares into such a listing? Okay. On the first one, just to give you a final, I'm glad you asked because I forgot to mention that We this is a way of premature disclosure or announcement. As you know, normally for our debt, but at least we only sit down at a point of signing, not upon any kind of discussion. The so this has been premature we expect from this today to sign, assuming everything goes well within a period of 3 months. At 1st 6 months, but we are targeting to be 3 months. After the signing, we expect the whole approvals to be done with the next 6 to 9 months after that. So we're looking at a possibility of third quarter for completion, provided everything goes well. The kind of milestone on the post signing will, of course, include the regulatory approvals We do not foresee significant issues in most countries, but of course, in Asia, the biggest work to be done is in regards to approving the merger of the 2 companies. So that will be, perhaps, both of the work to be done. The rest is, should be quite straightforward. In terms of from now, defining there are a lot more to be done and the visits have been. So we've we've that includes some others, the whole how we want to run this company, which has not been completely detailed in terms of board management and all that. Even for the board, as homework management, we will decide the whole entire lineup of the West Coast CEO, CXOs and all the companies including the mission code before we sign. Of course, there are many other points to discuss. So those are the kind of things to be done. So in short, from now to signing, 3 months or so from signing to completion 6 to 9 months. On the second question, of course, we are not in liberty to disclose that. So obviously, we will look at the we did look at SOTP as one angle to look at it. We look at our share price in the past in future and so on. So those are the considerations. And of course, the synergy, those are just the considerations, but of course, they're not limited to experience exactly how they are being there. On the listing of much thought about this, there's no discussion whatsoever has been done exactly how Google Cash App and all that. So it's very premature to even talk about that. And more importantly, our focus by now, it's not about IPO because will be a long time from now frankly. Our focus upon completion is to work on the big integration at all levels, primarily, Malaysia Coe with Digi and Suncor and of course, the procurement center, the analytics group and so on, it's low growth to be done. So there will be a prime focus of the books completion. In fact, some of this work will be done even pre completion. Thank you. I'll come back in the queue. Thank you. We'll take the next question from Wishi Vu from BNP Paribas. Hi, good afternoon and thank Thanks for the opportunity to ask questions. My question, first one is with regard to how we should be looking at the ex Yatta list call, especially if the tension is eventually, IPO, the virtual And the second question is, I know you've still commented on, sort of the plan for Rovi. But I mean, is it reasonable to assume that we'll be able to continue to be helped by Exietta, given the development? And then, I also wanted to get your thoughts regarding, some of the initial feedback you've gotten from NCMP think the merger of Cellcom and BG and whether you can give us any comments around what conditions you think might be placed on the transaction for it to go through? Thanks. On the first question, Obviously, we are far from completing what is the end result of this whole day because even the IPO the timeline has not been defined yet. So we currently answer the question. Our delta role, obviously, pre export completions to ensure the integration is done correctly and well and to harness all the synergies that we just talked about. So that's all I can say right now. On, Robbie, yes, sir, it will be continued after the completion. I'll I'll adjust that directly. Of course, this is yet another area. We have not we have looked at few possibilities and opportunities, but we have not really comes down to any kind of decision, long way to go, I think. And we have a lot more time anyway. On the last question, we All I can say that we have informed them. I did point there's no comments before that we have not spoken to them. So therefore, we have not gotten To be fair, dental discussion whatsoever before today. We only file them today. So we don't know yet. Because I say this is still at the discussion stage, not even at a completion stage, not even at a high stage, Thank you. So I can just follow-up. With just some of us have just come off the call with Telenor CFO and he expressed optimism that there will not be any significant issues with regard to the Malaysian regulator So it's kind of new that you're saying that you've only just informed them today. Is there any comments there? Well, I guess if you look from, on paper, we have a very strong case. I guess in that respect, I resonant with their view and they shouldn't be because we have a very strong case in terms of the the if you look from a converged today, if it's today's world, people don't look at the mobile and the mobile industry involved. We are now going to put rich company. We compete with a fixed line, fixed line compete with us. If you look for that point of view, yes, we think that we have a very good case. Not only that, if you think about it, consumers have a lot of choices if I look at broadband yourself, 70% of usage of data is not even within the mobile company. 70% is WiFi, right? So actually the mobile companies are sharing whatever less than 30% of the pie. If you look at voice, in terms of calls that even quite all the mobile company combined is less than half. The majority is a Sky to the WhatsApp and all other choices. So consumers who are choices, I don't want to believe it too much, but just to give you a feel, that if you look at it logically, that should have issues. Thank you, Wishi. We'll take the next question from Tien Tsou from GIC. Your line is open. Please go ahead. Thanks for the opportunity to ask some questions. First question, you may have addressed this before, but I do manage to get on the call earlier. Why was Robbie excluded, from Surgical's? 2nd question is, what plans do you have for the minority shareholders in Digi. What happens to them? Do they end up with a stake in the merge code? Or do because the code just has a majority, but not 100% safety in Digi. And the 3rd question is, I guess, on on your dealings with the regulator, what are you prepared to to give up if they do have a prediction, I mean, the regulator will ask for some kind of for the Mojoko to give up? What are you prepared to give up? Okay. Before I answer your question, Dan, if I can, if you don't mind, if I can repeat the overall overall context of where we are. We are still in discussion stage. This is actually premature that we have done voluntarily. What does it mean? It means that there's so many things we have done even I announced to be very frank We are doing this primarily because of in anticipation of leakage, but of course, it was delayed out this morning by itself. And before that, we heard a lot of leakages, So we are trying to inform because of that. And from now to finding that there's a lot of due diligence to be done. And therefore, we do expect easily about 100 people involved and therefore the leakage is almost 100% sure and then therefore we announced prematurely Now because of that, it's in the preamble, I do many other questions that we can't really answer. But number 1, we can actually because it's pretty obvious that Rovi cannot be combined with Grabi phone. So it will be $0.80 or more in terms of the market share is number 1, number 2, right? Number 1 and number and then strong number 2. More because of that in anticipation of that, we decided might as well, we run it separately. Number 2, we are back to my preamble we have not even thought through what to do, how to do it in terms of the IPO of Cellcom versus DG The last one, yes, we have not crossed that path yet. A follow-up question, Andy. I mean, I understand that it's a very preliminary announcement. The merger ratio 6.5to43.5. That's quite a oh, I mean, a detail, which is quite far along the, along the line of the pro That's right. I mean, it's, why have you announced such a detailed merger ratio when a lot of the details still have to be lined out? Very good question. To make it worth it for us, because the significant amount of time required. This is a megaw merger. This is not a merger, right. We have I mean, our adjusted sales have done in in Sri Lanka, Indonesia, Cambodia, Bangladesh, and all involve one company. This is involving so many companies so massive. And a lot of tight effort will be dealt with and money to be spent. Hence, we agreed both sides that let's not waste too much time and And the impact on the risk of the focus on the business if we cannot even agree on the valuation, let's work on that first. So hence, we say that, okay, let's work on the ratio and then bring on it and it will be sent after that, okay, it makes sense. Then only we move to the other stages. That's how it's being done. Final question, is there a a break penalty or break clause in the, in the contract you signed up? Well, in the first minute, yes, not planning and rewinds is So there's no, and there's no binding because whole thing is not binding in the first place. We'll take the next question from Alex Goh from Ambang. Please go ahead. Yeah, thank you. I just want to return back to your order ratio of at the stake in the merged company of 43.5 percent. Can I just, confirm, is this based on your share of your EBITDA in the company or is it, on some other parameters that have been adjusted? That's my first question. And my second question is that if indicated, there would be synergies worth 15 to 20,000,000,000, what the 5 areas Could I give some sense of this over how many years? Is this 5 years or 10 years that you are you are looking at? And, just want to also double confirm, I've noticed that the India, idea, Vodafone idea, and the ANSEL is not mentioned in this slides that you've given us. So, I just wanna confirm that it's deliberately left out. And will those assets will still be under Alzetta's listing separately. Alright? So, the merged company will also be a a different entity within Alexander Group, which will have its own listing. As well, right? That's my second question. My third question is regarding your spectrum, how would you be able to optimize between Digi and Cellcom. What are the areas that you can actually I'm not sure how you can actually work that out because it's, and also, how does an operating level will the service quality and service targeting of the customers be, optimized? Okay. Thanks for the question. I can't answer in detail how the swap ratio is being done but in principle, as I mentioned earlier, it's definitely not just looking at one dimension. Look at fuel and essentially quite complex because we want to be triangulate with actually a few looking at so many other factors. But certainly not just, share EBITDA. That's the simplest of them all, but where will we be on that? My second question This is actually a present value of 5 years of synergy. But obviously, synergy will weigh beyond 5 years, right? But what we've done, we've calculated, we quantified that and over the 5, 6, 5 years post competition that we present value it. So yeah, I forgot this is this is one of the other areas that we spend a bit more time before we agreed if was it or not. One is the ratio. The other one is this energy. And because of both of them, they say, yeah, it is worth all the effort and time to make this happen. On the third question, yes, no answer is within the branch code. Idea is not. So idea and Ruby and ADS are not part of the West Coast. As you know, we have effectively classified ideas in investment not a strategic asset and therefore might as well take it out. On spectrum, well, we have not come to the spectrum yet of discussion with the between the two parties. So I can't comment on the regulatory side. How do you optimize? But if you answer your question coming from the authentic side, operationally, we have done that many times. All our spectrum combined spectrum in Indonesia is Sri Lanka in Cambodia and Bangladesh, we have done many, many times I dare to say that we are an expert in this area. And the British customer base, well, yes, we have not reached a point where we we have decided how to market. Right now, we are competing. Thank you, Alex. Okay. Yes, thank you. Thank you, Alex. We'll take the next question from Pram Jayar Rajasringham from Macquarie. Please go ahead. Hi, thank you for the opportunity. A few questions from me. But first, could I just clarify, I thought you I heard you say that the merger of Cellcom and DG would essentially be DG acquiring Cellcom, which therefore keeps this as a non cash transaction. Could you confirm that one? Then onto the main questions, Firstly, why now? Why could we not have done this earlier or even later? Just want to get your thoughts around that. And thirdly, I do appreciate that it's still early days, but from a management standpoint, I recall you made a comment saying that, there would be no change in the management teams, but would it not make sense if you are merging to bring in some of that Telenor expertise into the Agrieta group at all OpCos rather than just Alcom. What are your thoughts around that? Thank you. Why don't we wait after the first question? Yes. I think first question, you're right. It's basically be requiring telecom and it's a non cash transaction. Sure. So the second question is a good question. In fact, I can reiterate We've been, if you, during the last two consecutive investors conferences, what we call it, Ajeeta Analyst Day, we have been very clear that consolidation is key to our future. Now we made that so very clear that the even if we perform very well operationally, it's very hard in the long run to be sustainable with their self consolidations in some of the countries. So we've been working with for the last 2 years at least in all chipsets form different variations, different part of the different part of the operations, not necessarily the buyer operations. And by now, I said our content we have spoken to serious player serious one. There are many others at least testing plate that we have talked to to see what's the best way in the future while I've got performing operationally well. So The right now, in a way it's so happened that a lot of the way, we managed to discuss with Teledor and find that this is probably in the best combination, the best deal of combined deal compared to any other competition that we worked on so far. We could, of course, wait till later to some extent, but we believe the sooner we consolidate Malaysia, the sooner we invest, more than we could have in Indonesia, we will be better off this way. In terms of management, I want to clarify, when I say no change, it's only those not affected, outside Malaysia and outside of the whole goal, right, for now. Obviously, in the long run, contracts expired, people change and all that. Of course, we will review that. But right now, there's no plan to change. You're right. It makes sense to bring Talladone for this to improve and vice versa also. So it might not actually be at the highest level. Okay. Thank you. Just one follow-up. So at the end of this process, we will have a listed Malaysian entity. We will have a group as it stands today or maybe that replaced with a merged code which may have more than one listing. And we will have potentially listing of a tower business. Is that the right thought process? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Okay. Before I just want to copy the other question 3 just to be more precise. It could be a nice mix of people both in Malaysia and in a whole which is the much coal, right? So that's where the focus right now. There's so many things to be done. The focus will be the whole goal, Automotive School and the Aflacian coal of the combined company, Digi and Sasol. On a 4th question, you want to answer that? Yes, I can answer that. I think this is obviously not immediately. It's going to be in future. So, Malaysia consolidated company will continue, listed, Exyata will continue to be listed. The eventual plan is to list the multiple and the tower code, but that timeframe of when that would happen is still to be decided. Perfect. Thank you very much. Question from Arthur Fenida from Citibank. Hi. Thanks for the opportunity. Several questions for me, please. If I look at your savings of $15,000,000,000 to $20,000,000,000 target, it appears that you don't really have any geographic overlap outside of Malaysia. And typically, when you have overlap since where you generate the synergies, how do you come about getting the $20,000,000,000 target? 2nd question I had is with regard to the scale, within the markets following the deal. Obviously, you mentioned that as a as a key determinants for pushing deals, but most of the assets ex Malaysia are also independent and the deal doesn't create any additional scale because of the lack of overlaps. The individual assets also have no problems raising money on the local level anyway. What's the incentive to push this then? And that question I had is with regard to, Akshata's existence going forward as a holding company. If the assets are all held under Emergeco and with the exception of Ruben ADS, is this still practical to keep Akshata separately, running as a listed entity because it will be a holding company holding another holding company. How should we view a charter over the long run? Thank you. Okay. Very good question, Elizabeth. On the first one, if you turn to us what page is this? Then the 5 core synergy areas, the biggest of course on itself is the Malaysian company where the majority of CT and as turned off this way are probably to the tune of 40%, 45% of the synergies, right. We feel that the biggest of course is the network that is about 50% to 30 50 to 60% of the synergy. So it's pretty obvious when it comes to I'll come back and see it in a bit, but it's pretty obvious that's the biggest chunk. The second one is procurement. We spent about 6,000,000,000 dollars, $7,000,000,000 to $8,000,000,000 for a year. This has been about the phase of plus minus. So we're talking about US5 $1,000,000,000 dollars, US3 $1,000,000,000 of that easily for both sides. So we have done a bit of calculations. We also look at the the FactSet both against me, especially our credits to sell it on. Their procurement center has done a good job So that gains the yearly spend on CapEx, that's another set of synergy. The third one, what we have done is on the tower where we look at what our experience in the tower code are over the last 4 years or so we look and see if we were to cut out from all the operations, what would be the value uplift that we can be right from a valuation perspective. What is the cost savings that we can derive from renting into the in Dassault? We, ourselves, have realized data where when we cut off all the operations, all the towers actually from the operations, we have on OPEC easily to the tune of 10%, 15% OpEx per year savings. Our CapEx is to the tune of 15% to 25% CapEx savings Now we use that to see who will apply against the coming up of Jet Towers outside the operations. What would that be? And of course, I think it was more qualitative, but just to give you the idea, and then the HQ, right? We have they have HQ, we have HQ, but to manage this whole group, which is more than we've probably bought it double or double we probably don't need same kind of people or we might need again because support even beyond this. Because we are looking at a much higher growth in the future of the business. And last but not least, we look at wholesale looking at harmonizing our road race and all the things we do together. So pretty big scale involved here. Last but only to your question on Aljia. It's a good question. We look at few of we have few thoughts on that. Of course, it's premature to to declare exactly what we want to do with AGB beyond that. Yes, right now, the focus of AGB or Aljessa is to work with the Maestro in terms of the affinity because that is very important of our business case. I think I'll just add that. I think the purpose of this whole merger is a strong equity story and eventual potential existing over time of the Virgo. And at this point in time, the way we look at is if anyone wants to really enjoy the reap the benefits of long term equity story of the merge score exceeded our wood base to get in there. So I think from that perspective, short term, yes, what you're saying, maybe right, but the long term effect of the equity story benefit can come only through Asia. We'll take the next question from Ranjan Sharma, JP Morgan. Please go ahead. Exciting days ahead. Just a couple of questions from my side. Firstly, if you are to break down your synergies into cost avoidance versus cost savings, how would you do that? Considering, also that are we are we going to expect, reduction in headcount because that can be, a political discussion as well in some of the markets. Second thing is that when you have a discussion of MCMC and looking at the antitrust regulations in Malaysia, is there a threshold that you can't across a certain level of market share in terms of customers or of spectrum. So you might have to, shed some of that market share like vodafone idea, in India. And, and lastly, on the digital businesses, I does still not have any digital business in the in the region, why not combine them? Because you're taking a lot of losses from your digital businesses. So wouldn't there be more synergies if you were to build, let's say, 1 wallet rather than 2, 3 wallets? The first one, is it that you want to answer that? Yes, I mean, it's majority of it is actual cost savings very little would be avoidance. And I think the definition is always pretty vague, but we see large saving in Malaysia coming on account of network integration, reducing from duplicate network to network. We see large savings coming out procurement, which is basically about standardization of the bill of materials as well as the price book differential between what is there with Exjeda and Telenor and also the fact that these cave would be virtually two times, nearly two times of what individual company spends on. So most of these savings is actually in the form of actual and not avoidance as such. But yes, in future, specifically things like spectrum and all that, we'll have a future benefited in terms of need for more CapEx or need for more spectrum. On the account, we are one of the things that Elite from a data perspective is not necessarily a corridor. We are ourselves assuming that 0, theoretically the 0 account is this still a good deal to adopt this yet. From our old corporation, again, might not necessarily tell it on. We look at the headcount, it's about 10 to percent on the synergies, right. So, that's why we are not making 100% on that. Having said that, it has to be dealt that could be a productivity gain by combining the company. So I won't comment beyond that. I think we should be able to handle that. Of the attendance, number 2, we'll get on this. Okay. On number 2, I did try of the we are not aware of any policy or the threshold that did say beyond that number you have to reduce or beyond that spectrum you have to reduce. But as I said earlier, If you look at it from a pure mobile perspective, I believe pro form a pro form a, our market share will be 50, high 50, right, albeit to high-fifty. But today's what I changed so much is our job to explain to a FMC that then you should be looking at least from a coverage perspective. It includes DM and spine because the the board has been blurred so much that we cannot separate those 2. If that's the case, we only need to receive one set of the pie, right? Last but not least I mentioned earlier, if you look from a consumer point of view, there are so many choices today way beyond the all the local players, people have choices for voice and data. So, in that respect, we believe we have a very good case why this used to be done. In fact, on a positive side, the fight that is worked, we get more than we could ever be with regards to the country's digital agenda, especially broadband. On a digital business, very good question. We they do have they do have sizable operation in finance in the digital finance in Pakistan and many other countries, they do have advertising company, but that one is globally. They do have, one of the classified ads and geologists. So directionally, we are actually thinking of putting in part of the scope. But because there's so much work to be done on this. So, especially if headwinds share of digital can be very fluid, we decided to hold it to the phase 2. But before we sign, we will definitely have a firm position on this. Thank you. We'll take the next question from Srini Rao from Deutsche Bank. Please go ahead. Srinie here. Just I wanted to first clarify and again, taking off from Praeme's question on the merger mechanics. Is it fair to say first or one part of the deal is, Digi buying out Cellcom through a share swap. That's the first of leg of the transaction and then the second would be at the rest of the current list co Axiata giving stake to Telenor in lieu the assets. Am I correct in in in the transaction mechanism? And then, of subsequently, you know, as is mentioned, choose to lift the global tower collator, would that be a fair, so to say, understanding of the transaction mechanism? That's my first question. Okay. Okay. The second part where you're saying, ATB giving stick to Calynote, I I think based on the announcement, it is actually an injection of assets by Isaiah as well as Telenor into a merge call. And in result, Moscow issued new shares resulting in the shareholding as per the announcement. So that is the structure as far as the Moscow so as a result of this injection of assets by these 2 entities into a merge call, there will be a merger intended to be a merger between Cellcom and Digi, which as of now the plan is for it to be based on a non cash share issuance transaction, but of course, subject to regulatory approval an exemption. Sorry. The status on the telco, as well as the yeah. It's a telco as what mentioned by Dan Sri, that that is the intention. As part of the potential of the entities within the mesh code that that may be listed in the future include telco. Okay. So if I am an Axiata minority shareholder today, I should expect to get some shares in in the current Digi company, obviously in lieu of the telecoms assets going to and subsequently And subsequently then, and then secondly, with my Axiata minority shares today, I should expect them to get exchanged in to the shares of the merger when it gets listed on Bursa and some other exchange. Am I correct in this? Like what I mentioned, this involving ejection of assets by Azietta and Telenor of their Asian operations into immerchko. So as far as the minority shareholder of Aziata today, your position does not change. You still remain holding shares in Aziata. It is Aziata as an entity, Azitha, group of partners that will own the shares in the Mexico as a result of consideration of Vazieta entity injecting its assets into the Mexico. Similarly for Telenor, Telenor as a result of them injecting their Telenor Asian operation into the Mexico as a consideration, they will get a stake in the Mexico as part of the consideration. So again to reiterate as a minority shareholder of ASEA Sabruberhard today, your position does not change. Except that I might get shares in the current Digi list score, right? No, no. It will be the if any, it will be the much co who will be the shareholder of the listed merch entity of DG And Cellcom. So as a Xiyatta share, you continue to remain shareholder of Exxiatea. It's their role Exxiatea, which then owns a stake in the March as far as the and again as what was responded by has been responded by country and Vivek to the earlier question. As of now, Zietta remains as a listed company, being the shareholder of the merger based on that swap ratio that has been announced. I think bottom line, what we're trying to say is that the upside of the deal in in the future is the post completion, not now, is that the, any, the upside would have to get be delivered via Azeeta. So any investors who want the upside of the whole bunch of coal, including the ratio code, the combined BG and SACON, and the investment to Indonesia that we plan to do and so on and so forth. So the best way is to buy shares via Zeta. That was our proposition for completion. Understood. This is really helpful, Tanshu. Just two more questions I is it fair to say that there is no, I mean, as the deal mechanics suggests now, there is unlikely to require any general offer you know, in Malaysia at this stage. That's number 1. You know, so if you can if you can if you can clarify that, And secondly, is there any thought process of equalizing the stakes over a period of time? I don't know. And thirdly, at least, can you reaffirm the fact that the governance would be mostly cool and not reflect the difference in the shareholding? Okay. Let me ask Anish to answer that question. Of the budget in the shareholding? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] 3 questions. Okay. As what I mentioned, the intention is for the Malaysian merged entity between Columbus and Digi to remain as a little entity. And this will require a lot of discussion with the relevant regulatory authorities. Okay, on the first question, there's no plan at this point in time at all. The 5th question information earlier at a very important point is the side point is the merger of equals our feeling and a principle of that. And we will be we are, as we stay working out with the government model, but that Although the staff members will obviously reflect the shareholdings, right? So therefore, they won't have the majority. The way we run the company will reflect the spirit of the merger. And any plans No, there's no plan at this point in time. I don't have it on Monday at this point. We'll take the next question from Marvin Kila from UBS. Your line is open. Please go ahead. Hi. Thank you for the opportunity. I had a couple of questions. One is, given that essentially, you'll be shifting stakes in a lot of listed companies across the region into this new entity and that includes DTAC, Excel, Digi, obviously, is there a possibility that you might have to make a general offer for those individual entities, given that controlling stakes are changing hands. And then the second question is again, I understand a lot of details have not been ironed out. But is there a preliminary view on how you look at the debt levels in the combined entity either on an absolute basis or, I guess, debt to EBITDA or whatever way you look at it. Thank you. What do you ask the second question? Let me answer Navin, the second question. I think as a combined entity, we look at a bit headroom, which should be as being around $15,000,000 to $20,000,000 in terms of the additional head group based on current debt EBITDA requirements. However, we also feel Given the strength of the balance sheet, we should have a much better potential rating going forward. The first question on it. Again, so like what we have highlighted, yes, we acknowledge that this would involve transfer of assets across I think 9 countries. Yes, it will be part of the Phase 2 discussion. Where we will actually go into the details of the requirement including discussion with the relevant regulatory authorities. And my guess, the answer is that we're still not sure there is a possibility that you may have to make general offer for some of these companies like DTAC and Excel and so on. And I guess the second question, which is related to that also, is, whether there is a risk of a capital gain tax liability, as you do these, take transfers in terms of these cases. Yes. Basically, before we go into this stage, there have been a preliminary study that have been done. But I put a safe only today that we have announced and the next step will be for us to actually take the outlook at the details and have a discussion with the relevant regulatory authorities. We it is acknowledged as per all the things that you have mentioned. Based on the current district guidelines, yes, there is a possibility. Okay. Thank you. Thank you, Marvin. We'll take the next question from Sivath Ludin from Goldman Sachs. Please go ahead. Hi, two questions from my side. So first one, in your ASEATA 3.0 plan in terms of being a new generation digital champion, what will the merger code do versus ATSX often executing digital efforts? What I'm trying to understand here is the operational splits between Nasia and the merch go later. And second question is Could you give us more color on what do you mean by CapEx intensive growth in Indonesia and Thailand? Should we actually expect any change in the company's directions this year? Thanks. Okay. On the first question, this is one of the many things we have not decided what to do yet. So it is conceivable that the we will operate separately or we we operate together, right? Again, I really cannot answer this question, on what we want to do with the digital companies. But having said that, it is our intention to see whatever our intention to actually put it as part of the Burgical and then combine the operations, other digital and the operational and of course, at the same time leverage, the off course for the synergies. So beyond that, I really cannot answer your question at this point. On the second question, yes, one of the, I shall say, I cannot talk about pilots per se by the end of my judicial, one of the expressed via from this deal, although not captured formally, is that we intend to invest more in both broadband and mobile than what we have been in the past. We believe that we have the unique opportunity to have a good position, strategic position in mobile. And also to capture the opportunity broadband in Indonesia. Obviously, as we have mentioned to the investors, we are of even without Telenor, we're looking at it already in a Cedar suite and investing to some extent, but we believe we can double down on this That's the point. Okay, got it. Just a clarification. You mentioned you expand more into mobile and broadband. Is that correct? That's right. We'll take the next question from Peter Milliken from Deutsche Bank. Please go ahead. Hi. Actually, I had pretty much the same question of what you were planning to do with the increased firepower in Indonesia. And I think you've you've kind of hinted at that already. So should I assume that, I mean, you talk about wanting to get into broadband more But on the mobile side, I guess XLXIATA has been constrained. Do you see that that constraint is now ending after the merger? Yes, of course, responsibly. But yes, I think our constraint is point as funding, our constraint is how do they expect to our short term profit. We are very conscious that as part of our 2019 strategy that we want to deliver in 2019 2020, we want to deliver more profit So trying to balance that has been very tricky for us both in mobile and especially broadband. Now with this, I'm not saying that we will go full blast irresponsible But of course, we have much more latitude, the accretive investment with relatively lower impact to our profit. And of course, with the funding that we have with almost negligible impact to our funding capability. If I may just add, I think to be fair, this is the initial objective, but it's not sat down with Serrano to develop the future combine business plan. I think that's when the second phase, we will do that and that's when we will have the real visibility of what we want to in each of the markets. Yes. To confirm that, the business plan, the strategy, but the whole more fresh go and a business plan, very specific spend and the financials will be only decided and agreed upon at a point of signing. That all makes perfect sense. Thank you very much. Thank you. Thank you, Peter. We'll take the next question from Rama Marudava from Daiwa. Hi. Good afternoon. I have two questions, please. Firstly, with regards to the combined entity, could you talk to with regards to how you tend to set the dividend policies going forward. And, in particular, if there are any balance sheet constraints, from a retained earnings perspective, second one is with regards to the the tower business and the valuations given that this is a in market consolidation, high reflected a potential valuation shift, when you have decided on the merger on the number 1, obviously, we've not even discussed that. This has not been on the table at all, so I can't even answer that. On number 2, I kind of we mathematically, we have done a lot of homework on this relationship to derive as the synergies But, again, at this point, we are not in liberty to disclose. Okay. Sorry about that, Robert. I did have a question. That's all the time we have for question and answer for today's call. We'll pass back the call to the speakers. Any additional or closing remarks. Well, thank you again. To fall by joining this conference call. And I know it's been a last minute thing where we invited me this morning, but for because of the reasons that we are aware of. We couldn't do it earlier. So I'm particularly very excited about this deal, which is a takeout manager. Apparently one of the largest, so the largest mergers are in the last 1 or 2 decades. So this will be the real needle moving event for us and also hopefully for Telenor. Thank you very much. That concludes today's conference. Thank you everyone for your participation. You may now disconnect.