Indonesian telcos XL Axiata, Smartfren explore potential $3.5b merger

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Indonesian telcos XL Axiata and Smartfren are in early talks of a potential merger, the companies said in a statement. Axiata Group, the Malaysian conglomerate that owns XL Axiata, and a consortium led by Smartfren parent firm Sinar Mas have signed a non-binding memorandum of understanding to explore the merger.

Both Axiata Group and Sinar Mas intend to remain as joint controlling shareholders of the resulting entity. The merger seeks to leverage Axiata Group’s telco expertise with Sinar Mas’ local scale and market knowledge.

The two parties have been in discussion about a merger since as early as 2021. Such a deal would potentially create a US$3.5 billion entity with 100 million customers.

Axiata Group said in the statement that XL Axiata is its largest asset, and Indonesia – where it also operates Linknet, Boost, and ADA – is its “highest value creator.” Apart from Indonesia and its home country, Axiata also operates in Bangladesh, Cambodia, and Sri Lanka.

XL Axiata is profitable, most recently earning US$34 million in net profits for the first quarter of 2024, out of US$530 million in revenue. Meanwhile, Smartfren recorded its first profit in 2022, but it reported a net loss of US$6.8 million last year.

See also: Sinar Mas Land’s dual approach to create Indonesia’s Silicon Valley