Jakarta. Telecom giants XL Axiata (IDX: EXCL) and Smartfren Telecom (IDX: FREN), along with Smart Telecom (Smartel), have announced a strategic merger to create a new listed company, XLSmart Telekom Sejahtera, or XLSmart. The deal, valued at over Rp 104 trillion (US$ 6.5 billion), aims to strengthen their position in Indonesia’s competitive telecom market.

The merger is expected to close by the first half of 2025. CIMB and J.P. Morgan are financial advisors for Sinar Mas entities, while Deutsche Bank and Maybank are advising Axiata, and Citibank is advising XL Axiata.

The merger will allow XLSmart to expand its reach and invest in digital infrastructure more effectively. The combined entity is expected to foster innovation and create a healthier competitive environment in the market.

“This merger is an important step toward building a strong digital economy. It will allow us to meet Indonesia’s unique infrastructure needs by enhancing coverage, service quality, and product offerings,” Vivek Sood, CEO of Axiata Group, said in a statement on Wednesday.

Dian Siswarini, CEO of XL Axiata, added that the merger underscores their commitment to strengthening the country’s digital economy and bridging the digital divide. “Together, we aim to deliver value to shareholders and help advance Indonesia’s technology sector,” she said.

XLSmart will combine the customer bases of both companies, with a total of 94.51 million mobile subscribers and a 27 percent market share. The new entity is expected to generate a revenue of Rp 45.4 trillion and EBITDA of more than Rp 22.4 trillion. 

The merger is set to realize significant cost synergies, with an estimated annual run-rate pre-tax synergies of $300 million to $400 million post-integration completion, through strategic network integration and resource optimization.

At completion, shareholding equalization will result in Axiata receiving up to $475 million. At transaction closing, Axiata will receive $400 million, along with an additional $75 million at the end of the first year, contingent on meeting specific conditions.

Franky Oesman Widjaja, Chairman of Sinar Mas Telecommunication and Technology, said that the merger would add significant value for all stakeholders. “This is an important move to support digital transformation in Indonesia and create better services for our customers,” he said.

Widjaja also referenced the proverb, “If you want to go fast, go alone; if you want to go far, go together,” emphasizing the importance of collaboration in achieving long-term goals. He said Sinar Mas’s motto, “Together, we go far, fast, and beyond,” perfectly captures the spirit of the merger.

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