The planned merger between PT Smartfren Telecom Tbk (FREN) and PT XL Axiata Tbk (EXCL) has raised significant questions about the future of Smartfren's stock listing. With the merger, Smartfren is at risk of being delisted from the Indonesia Stock Exchange (BEI), as the process will see FREN shareholders becoming EXCL stakeholders.

As outlined by I Gede Nyoman Yetna, the Director of Company Valuation at BEI, the potential delisting is based on Indonesia’s Corporate Law, specifically Law No. 40 of 2007 on Limited Liability Companies. According to this law, shareholders of a company that merges or consolidates automatically become shareholders of the surviving entity. Therefore, Smartfren’s listing may end once the merger is complete, as EXCL will absorb FREN into a new entity named PT XLSmart Telecom Sejahtera Tbk.

However, in the event of a merger, shareholders who are dissatisfied with the outcome have the right to request that their shares be bought back at a fair price, as stipulated under Indonesia’s corporate law. This allows FREN shareholders the opportunity to exit the company if they do not agree with the merger, giving them a measure of control in an otherwise complex corporate restructuring.

While the merger itself does not immediately result in delisting, it is likely that Smartfren will no longer operate as an independent entity once the process concludes. This will see the company integrated into the larger XL Axiata structure. The merger, valued at Rp 104 trillion, is expected to create a dominant player in Indonesia’s telecom sector, driving significant innovation and investment, particularly in 5G infrastructure and digital services.

XL Axiata's CEO, Vivek Sood, has highlighted that the combined entity will benefit from substantial financial strength and market power. The merged company, XLSmart Telecom Sejahtera Tbk, will not only expand its telecom coverage but also increase its ability to innovate and invest in the growing digital infrastructure of Indonesia.

Despite the anticipated synergies and benefits of the merger, the process still awaits approval from both regulators and shareholders, with the final integration expected by mid-2025. In the interim, Smartfren’s shareholders will be closely monitoring the situation to understand how the merger will impact their investments, especially in terms of delisting and potential buyback options.

The deal is expected to produce significant cost savings, with estimates of pre-tax synergies ranging from $300 to $400 million. This will be achieved through network integration and the optimization of resources, enabling XLSmart to strengthen its position as a key player in Indonesia’s competitive telecom market.

TEMPO