MCMC Should Investigate The Proposed Celcom Axiata-Digi Merger To Protect Consumers’ Interests

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Press Statement By Chong Chieng Jen:

The Malaysian Communications and Multimedia Commission (MCMC) must investigate into the proposed Celcom Axiata-Digi.com merger and not grant the authorisation for such proposed merger.

Under our Communications and Multimedia Act, 1998 (CMA 1998), the Malaysian Communications and Multimedia Commission is the regulatory body in the telecommunication business. Section 133 of CMA 1998 provides that:
“ A licensee shall not engage in any conduct which has the purpose of substantially lessening competition in a communication market.”

However, Section 140 of CMA 1998 allows MCMC to authorise such conduct upon application of a licensee on the ground of “national interest”.

At present, there are 4 major licensees in the telecommunication market in Malaysia, namely:

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

With the proposed Celcom-Digi merger, the post-merger entity will control more than 50% of the mobile subscribers in Malaysia’s telecommunication market. This will greatly reduce the choices to the consumers at large in Malaysia, which is counter-competition and adverse to consumers’ interest in both choices and pricing.

There is no question that the proposed merger will have the effect of anti-competition on the telco sector in Malaysia, which contravene Section 133 of CMA 1998 and there is nothing of “national interest” for MCMC to authorise such proposed merger.

Back in 2015, when the Sweden 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 investigation with 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.

At the end, the proposed merger was called off as the 2 operators could not justify the proposed merger in terms of the interest of the Danish consumers.

The Danish case is similar to the current telco business in Malaysia where we also have 4 majors service providers and the merger will reduce the 4 operators to 3, and the merger entity will control more than 50% of the current market, leaving the other 2 operators unable to provide effective competition in the market.

In fact, in the special briefing of Axiata on 8-4-2021, when the Axiata’s President cum CEO, Datuk Izzaddin Idris was asked about the possible merger of both the companies respective their Bangladesh operations, his response was “impossible to merge the businesses as it will go against the anti-competition act.”

If even 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 in our country.

Therefore, in the interest of the country’s 32 million consumers, I call upon MCMC to act immediately and not to authorise such proposed merger.

13-4-2021
Chong Chieng Jen
DAP Sarawak Chairman
MP for Stampin / ADUN for Kota Sentosa