Indonesian telecommunications giant Axiata and conglomerate Sinar Mas are in talks to explore merging their respective operations in Indonesia. The potential merger would involve combining XL Axiata, owned by Axiata, with Smartfren, the mobile network subsidiary of Sinar Mas.
In a recent stock exchange filing, both parties disclosed that they have signed a non-binding Memorandum of Understanding to initiate discussions on merging XL Axiata and Smartfren. Smartfren, headquartered in Jakarta, is currently the fourth largest telecom operator in Indonesia, boasting around 30 million subscribers.
Although discussions are still in the preliminary stages, the filing indicates that if the merger proceeds, both Axiata and Sinar Mas would retain joint controlling stakes in the new entity.
A press release from Axiata highlighted the potential benefits of the merger, emphasizing that the combined company, referred to as “MergeCo,” would possess the strategic capabilities and scale necessary to meet the evolving demands of consumers, businesses, and the Indonesian public sector. MergeCo aims to enhance customer experience and generate additional shareholder value through synergies resulting from the integration of XL Axiata and Smartfren operations.
Upon completion of the merger, MergeCo would have approximately 100 million subscribers, placing it on par with Indosat Ooredoo Hutchinson, Indonesia’s second largest telecom player in terms of subscriber base.
Axiata’s interest in mergers and acquisitions (M&A) extends beyond Indonesia. Last month, Axiata’s Sri Lanka-based subsidiary, Dialog Axiata PLC, announced a merger agreement with Bharti Airtel, marking another significant move in the telecom sector. The deal involves a stake swap, with Dialog Axiata gaining full ownership of Airtel Lanka in exchange for Bharti Airtel acquiring a 10.4% stake in Dialog Axiata. This transaction significantly bolsters Dialog Axiata’s market presence, combining Airtel Lanka’s 5 million subscribers with Dialog Axiata’s existing 17 million, solidifying its dominant market share in Sri Lanka.
