The deal would see the two companies combine their telecom and infrastructure assets into a new company, of which Telenor would own 56.5 percent and Axiata the remaining 43.5 percent, Telenor said in a statement on Monday, adding that these figures were subject to change.
According to Telenor, which operates in the Nordic nations as well as Eastern Europe and Asia, the combined businesses would have close to 300 million customers in nine different countries, making it one of the largest mobile infrastructure companies operating in Asia.
Telenor said it wants the new company to take an "active role in accelerating technology transformation and digitalization" across Asia.
"Together, we aim to create a leading and well-diversified pan-Asian telecom and infrastructure company with substantial synergy potential and strong regional operations," Gunn Wærsted, chair of Telenor Group, said in a statement.
Telenor currently operates in Thailand, Malaysia, Bangladesh, Pakistan and Myanmar, while Axiata has operating companies in Malaysia, Bangladesh, Cambodia, Nepal, Sri Lanka and Indonesia, however Axiata's mobile business in Bangladesh, Robi, would be excluded from the deal and independently managed by Axiata.
The two companies hope the agreement, which needs both regulatory and shareholder approval, can be finalized within the third quarter of this year.
The new company would have its operational headquarters in Kuala Lumpur and was planned to be listed on an international stock exchange as well as on Bursa Malaysia.
Axiata's share price rose 2.3 percent following the announcement on Monday.