Axiata Group and Sinar Mas Group Nearing Agreement to Merge Telecommunications Operations
MALAYSIAN wireless carrier Axiata Group and Indonesian conglomerate Sinar Mas Group are nearing an agreement to merge their telecommunications operations in South-east Asia’s largest economy, people familiar with the matter said.
Deal Structure and Timing
The owners of XL Axiata and Smartfren Telecom are finalising details of a transaction that could be announced as soon as this week, the people said, asking not to be identified because the matter is private. The companies have been discussing the structure of a deal that may involve a mix of cash and shares and that would create an entity with about 100 million customers, Bloomberg News reported in April.
Market Reaction
Shares in XL Axiata have gained 15 per cent this year, giving the company a market value of US$1.9 billion. On the other hand, Smartfren’s shares have dropped 46 per cent and the market value hovers at around US$812 million.
Current Status and Timeline
Talks are still ongoing and could still face delays, the people said. If it pushes through, a deal would cap more than three years of discussions.
Representative Comments
A representative for the companies declined to comment.
Previous Developments
The companies said in May they had signed a non-binding memorandum of understanding. Both Axiata and Sinar Mas were seeking to remain as controlling shareholders of the merged entity, they added.
Industry Context
An Axiata-Sinar Mas deal would add to the list of Indonesian telecoms mergers over the past few years. CK Hutchison Holdings and Qatar’s Ooredoo QPSC completed a merger their local telecoms businesses in 2022 in a US$6 billion transaction as they sought to fend off competition.
Conclusion
The proposed merger between Axiata Group and Sinar Mas Group is a significant development in the telecommunications industry in Indonesia. The deal, if completed, would create a entity with a large customer base and significant market share. The companies are still finalizing the details of the transaction, but the potential benefits of the merger are significant.
FAQs
Q: What is the proposed merger between Axiata Group and Sinar Mas Group?
A: The proposed merger is a deal to combine the telecommunications operations of XL Axiata and Smartfren Telecom, creating a entity with about 100 million customers.
Q: What is the current status of the deal?
A: The companies are finalizing the details of the transaction, and the deal could be announced as soon as this week.
Q: What are the potential benefits of the merger?
A: The merger could create a entity with significant market share and a large customer base, allowing the companies to better compete in the Indonesian telecommunications market.
Q: What is the current market reaction to the proposed merger?
A: Shares in XL Axiata have gained 15 per cent this year, while Smartfren’s shares have dropped 46 per cent.
