Malaysia’s Axiata Group and Indonesia’s Sinar Mas Group announced a landmark US$6.5 billion merger of their Indonesian telecom units on Wednesday (Dec 11) to form XLSmart. The move underscores how companies are increasingly consolidating their businesses as they vie for market share in Indonesia’s fiercely competitive telecom sector.
The merger of Axiata’s XL Axiata and Sinar Mas’ Smartfren, pending regulatory and shareholder approvals and set to close in the first half of next year, is expected to deliver annual pre-tax savings of US$300 million to US$400 million through network integration and resource optimisation, according to a joint statement by both companies.
The merger hopes to drive 5G expansion, boost artificial intelligence and enhance network quality.
“XLSmart will have the scale, financial strength, and expertise to drive investments in digital infrastructure, expand service coverage, and foster innovation for customers, while contributing to a healthier and more competitive market,” said the statement.
Axiata Group and Sinar Mas will become joint controlling shareholders of the enlarged entity with each holding a 34.8 per cent stake, with equal influence over its strategic direction and decisions.
With a combined mobile subscriber base of approximately 94.5 million and a market share of 27 per cent, XLSmart is projected to generate pro forma revenues of 45.4 trillion rupiah (S$3.8 billion) and earnings before interest, taxes, depreciation, and amortisation (Ebitda) exceeding 22.4 trillion rupiah.