Indonesian telecommunications companies XL Axiata (EXCL) and Smartfren Telecom, along with its subsidiary Smart Telcom, have announced a strategic merger to create XLSmart.

 

The deal, valued at IDR 104 trillion (USD 6.5 billion), is expected to conclude in the first half of 2025, according to official statements cited local media.

 

The merger will establish XLSmart as a leading player in Indonesia's telecom industry, combining the customer bases of the three companies to serve approximately 94.5 million subscribers with a 27% market share. The new entity is projected to generate annual revenues of IDR 45.4 trillion and earnings before interest, tax, depreciation, and amortization (EBITDA) exceeding IDR 22.4 trillion. 

 

"This merger is an important step toward building a strong digital economy," said Vivek Sood, CEO of Axiata Group, parent company of XL Axiata, in a statement. He highlighted the merger’s potential to address Indonesia's unique infrastructure challenges as an archipelagic nation while enhancing service coverage, product diversity, and network quality. 

 

Franky Oesman Widjaja, Chairman of Sinar Mas Telecommunication and Technology, emphasized the collaborative spirit of the deal, stating, "Together, we aim to go far, fast, and beyond," aligning with the group's digital transformation goals. 

 

The merger process involves several regulatory and shareholder approvals. According to XL Axiata CEO Dian Siswarini, the company will submit its proposal to Indonesia's Ministry of Communication and Digital Affairs (Komdigi) on December 11, 2024, with approvals from Komdigi, the Financial Services Authority (OJK), and Bursa Malaysia expected to take three months.  

 

Extraordinary General Meetings of Shareholders (EGMS) for XL Axiata and Smartfren are planned for early 2025, with the merger officially commencing in the first half of the year. 

 

The deal aligns with the broader trend of telecom consolidations in Asia, driven by the rising demand for digital connectivity and the adoption of 5G and artificial intelligence technologies.  

 

Nezar Patria, Indonesia's deputy communication and digital minister, noted, "The telecommunications industry is increasingly saturated... the merger is inevitable." 

 

The companies estimate pre-tax synergies of USD 300-400 million annually through network integration and resource optimization. Despite plans to decommission overlapping sites, no immediate layoffs are anticipated.