Axiata and Sinar Mas merge telecommunications activities in Indonesia

The Axiata Group from Malaysia and the Indonesian conglomerate Sinar Mas Group have agreed to merge their telecommunications businesses in Indonesia. The merger values the business at 6.5 billion US dollars. As part of this merger, the operations of PT XL Axiata and PT Smartfren Telecom will be combined, with the former acting as the surviving entity and continuing to operate under the name XLSmart Telecom Sejahtera. The owners of both companies confirmed that this transaction will take effect from April 15. Smartfren investors have the option to receive 0.011 shares of XL for each of their shares. The closing price of XL Axiata shares fell by 2.2% in Jakarta. As part of this merger, Sinar Mas will acquire an additional 13.1% stake in XLSmart from Axiata, with up to 475 million US dollars agreed upon as a cash payment. Ultimately, both companies will hold 34.8% of the shares each, thereby having equal voting shares in the company's strategy. Interestingly, the agreement concluded after more than three years of negotiations. Notably, XL employees pushed for transparent communication and addressed job-related concerns. Commentators see potential in the merger for higher profitability through economies of scale and more efficient operations, similar to previous mergers in the sector. The Indonesian telecommunications industry is thus moving closer to a triopoly. The main player remains PT Telkom Indonesia with over 158 million mobile customers and a total of 169 million subscribers. XLSmart aims for about 95 million mobile subscribers and an estimated revenue of 45.4 trillion rupiah.