Heaptalk, Jakarta — PT XL Axiata Tbk (XL Axiata), PT Smartfren Telecom Tbk (Smartfren), and PT Smart Telcom (SmartTel) have reached a definitive agreement to merge, creating a new telecommunications entity, PT XLSmart Telecom Sejahtera Tbk (XLSmart). The merger, with a pre-synergy combined valuation exceeding US$6.5 billion, marks a pivotal milestone in Indonesia’s telecommunications sector.
The merger aims to accelerate Indonesia’s digital future by combining the resources and expertise of XL Axiata, Smartfren, and SmartTel. XLSmart is set to advance 5G deployment, network upgrades, and product innovation, enhancing customer experiences and addressing the unique infrastructure needs of Indonesia’s archipelago. The anticipated cost synergies of US$300-400 million pre-tax will be instrumental in realizing these goals. Furthermore, the key details of the merger include:
- XL Axiata will be the surviving entity, with Smartfren and SmartTel merging into XLSmart.
- Axiata Group Berhad (Axiata) and Sinar Mas will jointly control XLSmart, each holding a 34.8% stake and equal influence over strategic decisions.
- The transaction structure will see Axiata receiving up to US$475 million, with US$400 million disbursed at closing and an additional US$75 million contingent on certain conditions by the end of the first year.
- XLSmart will utilize its shareholders’ expertise, networks, and resources to accelerate digital transformation in Indonesia.
“This consolidation paves the way for a more connected Indonesia and ASEAN, addressing the digital divide and building a resilient digital economy. The synergies from this merger will create significant shareholder value while advancing infrastructure development and service quality.” Group Chief Executive Officer of Axiata Group, Vivek Sood, conveyed.
Business benefits of this measure
XLSmart’s enhanced scale and financial strength, with a combined subscriber base of 94.51 million and a 27% market share, position it as a transformative leader in the industry. The proforma revenue of US$2.8 billion, or around Rp45.4 trillion, and EBITDA of US$1.4 billion, or approximately Rp22.4 trillion, provide a solid foundation for innovation and growth.
The business benefits of XL Axiata and Smartfren will boost competitiveness, drive innovation, and unlock new growth opportunities. This merger also underscores their commitment to bridging the digital divide and fostering inclusive digital access. This merger also generates multiple advantages for other stakeholders, covering:
- Customers will benefit from enhanced connectivity, faster internet, and a broader service portfolio tailored to individual and business needs.
- Employees from all entities will gain access to expanded career opportunities and a collaborative work environment.
- Government and Regulators will see alignment with national objectives to optimize spectrum allocation and foster a sustainable market structure.
“We reinforce a shared, long-term commitment to Indonesia, empowering us with the scale and strength to contribute meaningfully to the nation’s digital aspirations. This merger opens vast opportunities for us to play an even greater role in Indonesia’s pivotal journey toward digital transformation. Through XLSmart, we can uphold our collective dedication to customers and communities nationwide. We thank the Government of Indonesia for its support in facilitating this merger. We believe we can achieve remarkable progress for Indonesia’s digital economy.” President Director of Smartfren, Merza Fachys, voiced.
