XL Axiata and Smartfren Officially Merge to Form XLSmart, Indonesia's Telecom Giant is Born

On Wednesday, December 11, 2024, PT XL Axiata Tbk (XL Axiata), PT Smartfren Telecom Tbk (Smartfren), and PT Smart Telcom (SmartTel) announced that they had reached a definitive agreement to merge. The merger will create a new telecommunications entity named PT XLSmart Telecom Sejahtera Tbk (XLSmart).

The combined pre-synergy value of the three companies is over IDR 104 trillion (approximately USD 6.5 billion). The merger is expected to generate proforma revenue exceeding IDR 45.4 trillion (around USD 2.8 billion) with an EBITDA of over IDR 22.4 trillion (approximately USD 1.4 billion). XLSmart is anticipated to leverage its scale and financial strength to accelerate investment in digital infrastructure, expand service coverage, and drive innovation for customers, while also creating a healthier and more competitive market.

Vivek Sood, Group Chief Executive Officer of Axiata Group, stated that the consolidation opens up a path for greater connectivity in Indonesia and ASEAN, as well as helping address the digital divide. "Axiata has extensive expertise in executing successful mergers that create value for shareholders, and we are excited to bring this expertise to XLSmart," said Vivek. He added that the combination of these complementary businesses would position the new telecom company uniquely to meet the evolving needs of customers across key market segments.

Meanwhile, Franky Oesman Widjaja, Chairman of Sinar Mas Telecommunication and Technology, expressed that the merger is a significant step to deliver greater value to all stakeholders through excellent services, digital connectivity, and innovation. He also highlighted that the merger supports the Indonesian government’s efforts in driving digital transformation. “We greatly appreciate the support from the government, as well as the dedication of all employees, partners, and investors who have made this merger possible,” Franky said.

Following the merger, XL Axiata will remain the surviving entity, while Smartfren and SmartTel will merge into XLSmart. Axiata Group Berhad and Sinar Mas will become joint controlling shareholders, each holding 34.8% of XLSmart’s shares, granting them equal influence in the company's strategic direction and decision-making. Upon completion of the transaction, Axiata will receive a payment totaling up to USD 475 million (around IDR 7.6 trillion), with USD 400 million (approximately IDR 6.4 trillion) paid at the time of closing, and an additional USD 75 million (around IDR 1.2 trillion) to be paid after one year, contingent upon meeting certain conditions. With the support of its shareholders, XLSmart aims to accelerate Indonesia’s digital transformation by leveraging the networks, expertise, and resources of its investors.