A proposed merger of Telenor Group and Axiata Group’s units in Malaysia received clearance from the country’s communications regulator after the operators offered a number of measures to address competition issues initially raised.

In a joint statement Telenor subsidiary Digi and Celcom parent Axiata announced they had received a notice of no objection from the Malaysian Communications and Multimedia Commission (MCMC).

The deal to combine Celcom and Digi still requires approval from the country’s securities commission, stock market and final sign-off from shareholders of both companies. It is expected to close in H2, a timeline which has already been pushed-back from an original target of Q2.

Following the MCMC’s initial assessment of the proposal, the operator groups offered a number of remedies designed to offset any competition concerns. These included: returning 70MHz of spectrum; establishing an independent wholesale business unit to support MVNOs; and divesting of Celcom’s Yoodo sub-brand.

The pair also separately pledged to plough around $55 million into an innovation centre in Kuala Lumpur, and have frequently outlined the case for combining the two units in terms of creating synergies and improving connectivity in the country.

Celcom and Digi have around 9.5 million mobile connections each, GSMA Intelligence estimates for Q1 show. This places them as the second and third largest players in the market, respectively, behind Maxis on 11.6 million.

Head of Telenor Asia Jorgen Arentz Rostrup stated the approval was a positive milestone in attempts to establish a “commercially stronger and more resilient digital service provider”.