Sinar Mas Group, led by Franky Oesman Widjaja, has confirmed the merger between its telecommunication entity, PT Smartfren Telecom Tbk. (FREN), and PT XL Axiata Tbk. (EXCL). The merger will result in a new entity, PT XLSmart Telecom Sejahtera Tbk. (XLSmart).

Franky expressed confidence that the merger will boost efficiency, cut costs, and enhance services over time. He revealed that the consolidation could generate savings of approximately Rp2.5 trillion within the next five years. The first two years will focus on restructuring efforts.

One of the key benefits, according to Franky, is eliminating redundant services between XL and Smartfren, which is expected to reduce operational expenses while improving service quality.

"What we are doing with XLSmart is indeed a rights issue. It has great synergy because there will be no redundancies. Over five years, we can save US$1.5 billion that's around Rp2 trillion, even Rp2.5 trillion," Franky stated at the Indonesia Stock Exchange (BEI) building on Monday (March 3, 2025).

Despite the ongoing market volatility, Franky assured that his team remains committed to working hard and is optimistic about the merger's outcome.

"Yes, we work hard and pray hard. Insha Allah," he added.

From a fundamental perspective, Franky emphasized that there will be no negative impacts on the companies. Instead, he expects the consolidation to strengthen their financial position.

"The fundamentals, as we mentioned, won't change, they will only get better. With US$1.5 billion in savings over five years and US$300 million each year after the restructuring period of about 1.5 to 2 years, this is a very efficient move, and our services will improve," Franky explained.

Based on the Analyst & Investor Conference Call materials from XL Axiata, XL will remain the surviving entity listed on the BEI. New shares will be issued to Smartfren shareholders according to a merger ratio of 72:28, representing XL Axiata and Smartfren’s equity values.

Following the merger, Sinar Mas will hold a 21.7% stake in XLSmart, while Axiata will secure 47.9%.

Additionally, Sinar Mas plans to acquire a further 13.1% stake from Axiata in exchange for US$400 million upon the merger's completion and an extra US$75 million on the merger's anniversary, subject to certain conditions.

As a result, both Axiata and Sinar Mas will each hold 34.8% of XLSmart’s shares, becoming joint controlling shareholders with equal influence over the company’s strategic direction.

The merger is expected to be completed in the first half of 2025.

PHOTO: DOK. SINAR MAS

This article was created with AI assistance.