Axiata and Sinar Mas discuss $3.45bn Indonesian merger 


The combination would reduce the number of mobile players in the market from four to three, creating an entity with roughly 100 million subscribers 

Indonesian telco Axiata and conglomerate Sinar Mas have entered discussions to discuss a potential merger of their Indonesian telecommunications operations. 

According to a stock exchange filing, the two companies have signed a non-binding Memorandum of Understanding to “mutually explore the proposed merger of XL Axiata and Smartfren.”  

Smartfren is Sinar Mas’ Jakarta-based mobile network subsidiary, currently the fourth largest operator in Indonesia with roughly 30 million subscribers. 

Discussions are in the very early stages, though the filing notes that, if the merger were to go ahead, both companies would remain as joint controlling shareholders. 

“Axiata believes that MergeCo will have the strategic agility, competence and scale to meet increasing expectations and demand from consumers, businesses and the Indonesian public sector,” reads the press release. 

“MergeCo is expected to deliver superior customer experience in the telecommunications sector and create additional shareholder value including through synergies from the combined operations of XL Axiata and Smartfren,” it continued. 

The combined business would have roughly 100 million subscribers – roughly the same size as the second largest player in the market, Indosat Ooredoo Hutchinson. 

Malaysian telco group Axiata has had a busy few weeks when it comes to M&A activity. Last month, Dialog Axiata PLC, one of Sri Lanka’s largest telecommunications service providers and Bharti Airtel signed a deal to merge their Sri Lankan operations. Under the terms of the agreement, a stake swap will take place; Dialog Axiata taking 100% ownership of Airtel Lanka in exchange for giving Bharti Airtel a 10.4% stake in Dialog Axiata. As a result, Airtel Lanka’s 5 million mobile subscribers integrated with Dialog Axiata’s 17 million, giving Dialog Axiata a market share of over two-thirds.  

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