KUALA LUMPUR: Shares in Digi.com Bhd rose to its highest in over two months in early trade Tuesday following the signing of proposed merger agreements.

       The telco rose 2.78%, or 12 sen to RM4.44, its highest since early April. Year-to-date, it has risen some 9.4%.

       Axiata Group Bhd, Telenor Asia Pte Ltd and Digi have signed the transaction agreements for the proposed merger of Celcom Axiata Bhd and Digi.

       The merger of Celcom Axiata Bhd and Digi, referred to as MergeCo, would serve an estimated 19 million customers with a revenue of RM12.4bil, Ebitda of RM5.7bil, profit after tax of RM1.9bil and fresh cash flow of RM4bil, it said.

       Axiata Group and Digi's parent company Telenor would be equal partners, each having a 33.1% stake in MergeCo which would continue to be listed on Bursa Malaysia Securities Bhd.

       PublicInvest Research said based on its earnings forecast for Digi, the group is valued at 25x forward PER versus its valuation of 26x.

       “All in all, we feel the valuation for Celcom and Digi is fair. We maintain our neutral rating on Axiata and Digi,” it said.

       Kenanga Research said looking ahead, before Celcom Digi Bhd (CDB) can leverage on its optimised network and dual brands to gain mobile market share, it risks losing market share in the near term from quality/service issues during integration, and cannibalisation.

       “That said, we foresee CDB continuing to drive growth through its enterprise and FTTH segments.

       “Estimating 5% net savings in FY22, we estimate CDB Ebitda to be RM6bil. FY22E DPS of 15.0sen yields 3.5%. Full estimates will be updated in due course,” it said, adding that it has maintained its ‘market perform’ on Digi with a target price of RM4.25.