On December 11, 2024, PT XL Axiata Tbk (XL Axiata), PT Smartfren Telecom Tbk (Smartfren), and PT Smart Telcom (SmartTel) finalized their merger agreement, creating a new telecom entity named PT XLSmart Telecom Sejahtera Tbk (XLSmart). The merger aims to reshape Indonesia's telecommunications industry with a combined pre-synergy valuation exceeding IDR 104 trillion ($6.5 billion).

XLSmart is projected to generate over IDR 45.4 trillion ($2.8 billion) in annual revenue and IDR 22.4 trillion ($1.4 billion) in EBITDA, providing a robust platform for innovation and market competitiveness. The merger integrates two complementary businesses, strengthening their ability to address Indonesia's digital connectivity needs.

Strategic Impacts and Financial Arrangements

Vivek Sood, Group CEO of Axiata Group, emphasized the merger's potential to bridge Indonesia’s digital divide and build a resilient digital economy. “This merger lays a strong foundation to meet Indonesia’s unique infrastructure needs, enhancing service quality, expanding product offerings, and improving network coverage,” said Sood.

Franky Oesman Widjaja, Chairman of Sinar Mas Telecommunication and Technology, highlighted that the consolidation enhances stakeholder value and aligns with government initiatives to advance digital transformation. Both Axiata and Sinar Mas will control equal stakes of 34.8% in XLSmart. Axiata is expected to receive $475 million post-transaction, with $400 million delivered upfront and $75 million contingent on first-year milestones.

Operational and Industry Significance

XLSmart combines the strengths of XL Axiata and Smartfren, leveraging scale and expertise to drive infrastructure investments, enhance service reach, and foster innovation. The new entity aims to cultivate a healthier competitive landscape in Indonesia’s telecom market.

The Indonesian telecom sector has witnessed increasing competition, prompting consolidations to achieve operational efficiencies. XLSmart’s creation is anticipated to solidify its market presence and address challenges inherent in serving Indonesia's diverse geography as an archipelago.

By uniting resources, XLSmart is better positioned to support government ambitions for digital inclusivity and to cater to a rapidly evolving consumer base demanding superior network experiences.

Outlook for XLSmart

With its considerable scale, financial strength, and strategic backing from Axiata and Sinar Mas, XLSmart is poised to transform Indonesia’s telecom industry. This landmark merger not only establishes a new market leader but also signals a significant step toward bridging the nation's digital infrastructure gaps, ensuring a more connected future.