KUALA LUMPUR, Dec 11 — Axiata Group Bhd has signed a definitive agreement with Indonesian conglomerate PT Sinar Mas Group to progress the proposed merger of PT XL Axiata Tbk (XL Axiata), PT Smartfren Telecom Tbk (Smartfren), and Smartfren’s subsidiary, PT Smart Telcom (SmartTel), in Indonesia.

XL Axiata is Axiata’s mobile unit in Indonesia.

Axiata said the merged entity, to be named PT XLSmart Telecom Sejahtera Tbk (XLSmart), will serve a combined mobile subscriber base of approximately 94.51 million, representing around 27 per cent of the local market share, further solidifying itself as one of Indonesia’s most influential and trusted telecommunications operators.

“It aims to serve millions of Indonesian customers by delivering seamless connectivity, innovative digital solutions, and investing in future technologies such as 5G, artificial intelligence, cloud-based services, and cyber resilience, driving growth in the Indonesian digital economy,” it said in a statement today.

Axiata said the proposed merger is expected to be completed by the second quarter of 2025.

“Upon merger completion, Axiata and Sinar Mas will remain joint controlling shareholders with 34.8 per cent ownership stake each in XLSmart, with equal influence over its strategic direction and decisions, as well as offering unique access to their extended networks, resources and expertise to support growth,” it said.

At completion, shareholding equalisation will result in Axiata receiving up to US$475 million (US$1= RM4.4250), while at transaction closing, the group will receive US$400 million, along with an additional US$75 million at the end of the first year, subject to the satisfaction of certain conditions, it said.

“The group will use the funds to primarily pare down debt.

“Additionally, by continuing to own shares of XLSmart, Axiata shareholders will have the opportunity to capture synergies and participate in the new company’s long-term value creation potential,” it said.

According to Axiata, the exercise will benefit XLSmart by achieving operational efficiencies and cost synergies, with estimated annual run-rate pre-tax synergies of US$300 to US$400 million post-completion of integration.

Meanwhile, Axiata added that upon completion, it will operate in markets with a three-player structure, where the group holds an over 25 per cent market share.

“Following the completion of the merger, XLSmart will join a high-value creation Indonesian portfolio of four other businesses, namely PT Link Net Tbk (Link Net), PT Edotco Infrastruktur Indonesia (Edotco), Boost, and PT Axiata Digital Analytics Indonesia (ADA),” it said.

Axiata chairman Tan Sri Shahril Ridza Ridzuan said the group believes that this relationship with Sinar Mas will further empower the company to deliver sustainable digital growth and make many of its goals a reality.

Group chief executive officer and managing director Vivek Sood said the group believes that XLSmart will be a powerful platform to deliver enhanced connectivity, foster digital inclusion, and bridge the digital divide forcommunities across the country.

“XLSmart’s priorities will be on ensuring a stable market environment, maximising merger synergies and driving profitable growth, and we are confident that it will be well-positioned to thrive in Indonesia’s dynamic digital economy,” he said. — Bernama