Norway’s Telenor (TEL.OL) and Thai conglomerate Charoen Pokphand Group (CP Group) have agreed to merge their business units in Thailand in a US$8.6 billion deal.

By combining True Corporation Plc. (True) and Total Access Communication Plc. (dtac), the two players will account to more than half of the mobile subscribers in the country.

Telenor and CP Group, which will own 50% equity each in the merged unit, said the new venture will focus on the development of tech-based businesses, creating a digital ecosystem, and establishing a start-up investment fund to support Thailand 4.0 Strategy and the efforts to become a regional tech hub.

During this exploratory phase, the current operations of True and dtac will continue to run their business as normal while their respective key shareholders: C.P. Group and Telenor Group aim to finalise the terms of an equal partnership.

Suphachai Chearavanont, CEO of C.P. Group and Chairman of the Board of True Corporation said: “Over the past several years, the telecom landscape has evolved rapidly, driven by new technologies and highly competitive market conditions. This means the transformation of Thai businesses into tech-based companies is a vital step to maintain competitive edge amidst global competitors.

“This transformation into a tech company is key to enabling Thailand to move up the development curve and to creating broad-based prosperity. As a Thai tech company, we can help unleash the enormous potential of Thai businesses and digital entrepreneurs as well as attract more of the best and the brightest from around the world to do business in our country.”

True and dtac will undergo necessary processes, including due diligence, and will seek board and shareholder approvals and other steps to satisfy relevant regulatory requirements.

Also commenting, Sigve Brekke, President and Chief Executive Officer of Telenor Group, said: “We have experienced an accelerated digitalisation of Asian societies, and as we move forward, both consumers and businesses expect more advanced services and high-quality connectivity.

“We believe that the new company can take advantage of this digital shift to support Thailand’s digital leadership role, by taking global technology advancements into attractive services and high-quality products.”