XL Axiata And Smartfren Officially Merged In To XLSmart

Doc: XL Axiata Smartfren

XL Axiata And Smartfren Officially Merged In To XLSmart

Thursday, 12 Dec 2024

On Wednesday, December 11, 2024, PT XL Axiata Tbk (XL Axiata), PT Smartfren Telecom Tbk (Smartfren), and PT Smart Telcom (SmartTel) announced the finalization of their merger agreement. The combined pre-synergy valuation of the three companies exceeds IDR 104 trillion (approximately USD 6.5 billion).

This merger will create a new telecommunications entity named PT XLSmart Telecom Sejahtera Tbk (XLSmart). The proforma revenue for XLSmart is projected to surpass IDR 45.4 trillion (around USD 2.8 billion), with EBITDA exceeding IDR 22.4 trillion (about USD 1.4 billion). XLSmart will possess the scale, financial strength, and expertise necessary to enhance digital infrastructure investment, expand service reach, and drive innovation for customers, all while fostering a healthier and more competitive market.

Vivek Sood, Group Chief Executive Officer of Axiata Group, expressed confidence that this industry consolidation paves the way for a more connected Indonesia and ASEAN and assists in addressing the digital divide. "Axiata is skilled at executing successful mergers that deliver value for shareholders, and we are excited to bring this expertise to XLSmart," Vivek stated.

He further remarked that this merger of complementary businesses will establish a telecommunications company uniquely positioned to meet the evolving needs of customers across key segments. Franky Oesman Widjaja, Chairman of Sinar Mas Telecommunication and Technology, emphasized that this merger is a significant step toward providing substantial value to all stakeholders through superior services, digital connectivity, and innovation, including supporting the Indonesian government's push for digital transformation.

"We sincerely appreciate the government’s support, as well as the dedication of all employees, partners, and associates, and, of course, the trust of investors that has made this merger possible," Franky added.

Here are the key details of the XL Axiata and Smartfren merger:

• XL Axiata will remain as the surviving entity, while Smartfren and SmartTel will integrate into XLSmart. • Axiata Group Berhad and Sinar Mas will serve as the joint controlling shareholders, each holding 34.8% of XLSmart with equal influence over the company's strategic decisions.

• Upon completion of the transaction, the allocation of shares will result in Axiata receiving up to USD 475 million (approximately IDR 7.6 trillion).

• After the transaction closes, Axiata will obtain USD 400 million (around IDR 6.4 trillion), plus an additional USD 75 million (approximately IDR 1.2 trillion) at the end of the first year, contingent upon meeting certain conditions.

• XLSmart will leverage the networks, expertise, and resources from its shareholders to expedite digital transformation in Indonesia.

(ferry@insightinnews.com)

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