Axiata Group and Sinar Mas Group are nearing a merger of their telecommunications operations in Indonesia. Sources familiar with the matter say the deal could merge XL Axiata and Smartfren Telecom, creating an entity with about 100 million customers.

The merger discussions are said to involve a mix of cash and shares, with an announcement anticipated soon. However, final agreements are not yet confirmed and may be delayed.

XL Axiata’s shares have increased by 15% this year, valuing the company at approximately US$1.9 billion. Conversely, Smartfren Telecom’s shares have decreased by 46%, resulting in a market value around US$812 million.

In May, both companies signed a non-binding memorandum of understanding. They aim to remain controlling shareholders of the new entity. This potential merger follows over three years of discussions, marking another significant move in the Indonesian telecommunications sector.

Representatives from Axiata and Sinar Mas have not commented on the current discussions.