Axiata Sinar Mas explore XL Axiata Smartfren merger in Indonesia
Axiata Sinar Mas explore XL Axiata Smartfren merger in Indonesia

Axiata, Sinar Mas explore XL Axiata-Smartfren merger in Indonesia

KUALA LUMPUR: Axiata Group Bhd and Indonesian group PT Sinar Mas have entered into a non-binding memorandum of understanding (MoU) to mutually explore a proposed merger of XL Axiata and Smartfren to create a new entity (MergeCo).

“The proposed transaction is at an early stage of evaluation with both Axiata and Sinar Mas intending to remain as joint controlling shareholders of MergeCo,” Axiata said in a statement.

Axiata entered into the MoU with PT Wahana Inti Nusantara (WIN); PT Global Nusa Data (GND) and PT Bali Media Telekomunikasi (BMT) collectively referred to as Sinar Mas.

The group said there is no certainty that the ongoing discussions between the parties will result in the entry into any binding agreement nor the completion of the proposed merger.

It added that during the exploratory phase governed by the non-binding MOU, activities will include validating the merger rationale, creating value for shareholders, conducting due diligence, preparing a joint business plan, and agreeing on key terms.

“With the intent to create a stronger telecommunications service provider in Indonesia, the proposed merger of XL Axiata and Smartfren is expected to bring together the combined scale, competencies, finances and deep telecommunication expertise of Axiata and the local scale and market knowledge of Sinar Mas to generate significant value.

“Both principals are expected to wield an equitable influence over the strategic direction and operational decisions of MergeCo, bolstered by their respective strengths,” it said.

“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.

“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,” Axiata said, adding that it committed to remaining a leading player in Indonesia’s digital and technology landscape, rooted in its long-term vision of supporting the country’s digital future.

“Indonesia is an important market and key to its strategic initiatives. XL Axiata is Axiata’s largest asset and from a portfolio standpoint, Indonesia is the highest value creator, where it runs five main businesses – XL Axiata, Link Net, EDOTCO, Boost and ADA,” it said.

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