Indonesian mobile operators XL Axiata and Smartfren Telecom, as well as it’s unit Smart Telecom, have agreed to merge. The new entity, named XLSmart Telecom Sejahtera (TXSmart), will have an enterprise value of 104 trillion rupiah ($6.5 billion).
The merger paths the way for a three-player telco market in Indonesia, with Telkom as the largest market player, followed by Indosat and TXSmart.
By combining both entities, XLSmart has expanded its mobile subscriber base to around 94.5mn and a market share of 27%. This creates a much stronger platform for the new operator to compete with Telkom and Indosat and will also lead to a healthier telco industry.
This follows a rise of telco consolidation across Asia, as operators increase their scale and resourcing to support investment into the rising demand for digitalisation and connectivity amidst a 5G and AI boom.
To equalise shareholding, Axiata is set to receive up to US$475mn in cash payments, which the operator has stated it will use to reduce its debt.
In a joint statement, Vivek Sood, Group CEO of Axiata Group, said “this merger is an important step in laying the foundation for a robust digital economy” and that XLSmart “will have the scale, financial strength and expertise to drive investments in digital infrastructure and expand service coverage”.
The deal is expected to be completed in H1 2025 and is subject to regulatory and shareholder approvals.
