XL Axiata and Smartfren Officially Join!
PT XL Axiata Tbk. (EXCL), PT Smartfren Telecom Tbk. (FREN), and PT Smart Telecom (SmartTel) have agreed to merge, with a combined value before synergy of over US$ 6.5 billion, or around Rp 104 trillion. The result of this merger will be a new telecommunications company named PT XLSmart Telecom Sejahtera Tbk. (XLSmart).
According to materials from the Analyst & Investor Conference Call XL Axiata, XL will be the entity that survives and remains listed on the Indonesia Stock Exchange (BEI). They will also issue new shares for Smartfren shareholders according to the merger ratio, which is set at 72:28 for equity value between XL Axiata and Smartfren.
Sinar Mas will receive 21.7% of the shares in XLSmart, while Axiata will have 47.9% of the shares. Additionally, Sinar Mas will also acquire an additional 13.1% of the shares in XLSmart from Axiata with a cash payment of US$400 million upon completion of the merger, and US$75 million on the anniversary of the proposed merger, subject to certain conditions that must be met.
Thus, Axiata and Sinar Mas will each hold 34.8% of the shares in XLSmart and remain controlling shareholders with equal influence over the company's strategic direction.
This merger is expected to be completed in the first semester of 2025. On December 10, 2024, the definitive merger agreement was signed by both parties. The day after, this merger proposal was submitted to the Financial Services Authority (OJK) and the Ministry of Communication and Digital (Komdigi).
It is estimated that the approval process from Komdigi will take about 2 months, while OJK will need 3 months. After that, the merger process will continue to the approval of the shareholders, which is expected to take 1.5 to 2 months, and will also need approval from Bursa Malaysia.
