Indonesian telecommunications company Axiata and the conglomerate Sinar Mas have initiated discussions for a potential merger of their respective telecom operations, XL Axiata and Smartfren. The companies have signed a non-binding Memorandum of Understanding to explore the proposal. The merger, if executed, would consolidate the number of mobile operators in Indonesia from four to three, creating a combined entity with around 100 million subscribers. Both Axiata and Sinar Mas would act as joint controlling shareholders of the new entity, referred to as MergeCo. The strategic rationale includes enhancements in scale, competence, and customer experience, alongside prospective shareholder value through operational synergies. Notably, this move aligns with Axiata’s recent M&A activities, including the completed merger of its Sri Lankan operations with Bharti Airtel’s Airtel Lanka, resulting in Dialog Axiata gaining a market share exceeding two-thirds. This Indonesian endeavor suggests a continued strategic focus on consolidation and expansion.

Telecommunications, Corporate Finance,Indonesia, Malaysia