KUALA LUMPUR -- Malaysian telecom operator Axiata Group and Norway's Telenor have ended talks to merge assets in Asia.
The deal would have created the largest telecommunications company in Southeast Asia in a challenge to regional leader Singapore Telecommunications. "Due to some complexities involved in the proposed transaction, the parties have mutually agreed to end the discussions," Axiata said in a statement.
Malaysian mobile service provider Digi.com, in which Telenor is the largest shareholder, said that with both parties still acknowledging the strong strategic rationale for the merger, the two companies did "not rule out that a future transaction could be possible."
Axiata and Telenor noted previously that one of the main reasons for the merger was rising capital expenditure for network and new technologies such as fifth-generation (5G) services. They said that the merger would have delivered up to about $5 billion of cost synergies through the consolidation of assets and economies of scale.
Axiata, which is 37%-owned by Malaysian state fund Khazanah Nasional, operates mobile services in Malaysia, Indonesia, Sri Lanka, Bangladesh, Cambodia and Nepal.
Telenor does business in Thailand, Malaysia, Myanmar, Bangladesh and Pakistan. Last year, 53% of its revenue came from Asian markets.
The proposed merged entity was positioned to be the largest telecommunications company in the region, with a combined annual revenue of $12 billion and a net profit of nearly $1 billion.
The companies claimed that the new entity would have been the biggest operator in six of the nine markets in which it would have been operating, the second in two, and the third in one.