Celcom – Digi merger should not be allowed, says Chong

By S. Harrish

THE Malaysian Communications and Multimedia Commission (MCMC) should investigate the proposed merger of Celcom and Digi and not grant the authorisation for it.

Stampin MP Chong Chieng Jen said that under Malaysian law, the telecommunication companies should not engage in any conduct which could substantially reduce competition in the communications market.

He said this was provided for under the Communications and Multimedia Act, 1998 and MCMC was the regulatory body in the telecommunication business.

However, he noted that MCMC is allowed to authorise such mergers on the grounds of “national interest”.

At present, there are four major players in the Malaysian telecommunications market.

There are:

  1. Digi, with 10.6 million mobile subscribers as at 2Q 2020;
  2. Maxis, with 9.5 million mobile subscribers as at 2Q 2020;
  3. Celcom, with 8 million mobile subscribers as at 2Q 2020; and
  4. U Mobile, with 7 million mobile subscribers as at 4Q 2020

Chong said in statement today that with the proposed Celcom-Digi merger, the post-merger entity will control more than 50% of the mobile subscribers in Malaysia’s telecommunications market.

“This will greatly reduce the choices to consumers in Malaysia, which is counter-competition and adverse to consumers’ interest, both in choices and pricing.

“There is no question that the proposed merger will have the effect of anti-competition on the telco sector in Malaysia.”

He said there was nothing of “national interest” for MCMC to authorise the proposed merger.

Citing an example, he said that in 2015, the Swedish TeliaSonera and Norwegian operator Telenor announced a proposed merger, claiming that the merger would “boost investments in networks and technology and benefit Danish consumers”.

The Danish European Commission immediately opened an investigation over concerns the deal could lead to higher prices and less innovation, and fears the two remaining rivals, TDC and Three Denmark, would provide insufficient competitive constraints.

The proposed merger was called off when the two operators could not justify it in terms Danish consumers interest.

Chong, who is also Sarawak DAP chief, said the Danish case was similar to the situation in Malaysia.

In fact, in a special briefing of Axiata on April 4, Axiata’s president cum CEO Datuk Izzaddin Idris was asked about the possible merger of both the companies’ respective Bangladesh operations.

His response was “impossible to merge the businesses as it will go against the anti-competition act.

“If even a country like Bangladash have laws to prohibit such merger to protect its consumers’ interest, we Malaysia should not fall behind in terms of protection of our consumers’ rights and interests.”

Therefore, he said MCMC should in the interest of the country, act immediately and urged it not to authorise the proposed merger.