According to Bloomberg News, the conglomerate giant Sinar Mas Group of Indonesia and Axiata Group, the largest wireless operator in Malaysia, are exploring setting up a joint telecom operation in Indonesia.
The shares of XL Axiata and Smartfren surged on this news. Axiata stock rose by 4.5 % on Friday, increasing the company’s market cap to $2.3 billion (32 trillion rupiahs). On the other hand, Smartfren shares increased by 8%, increasing the market value to 33 trillion rupiahs.
With representatives of Sinar Mar and XL Axiata declining to comment, there is speculation going on whether the merger deal will go through or not.
President Director of Smartfren, Merza Fachys, in response to a query from Bloomberg new, said, “Smartfren wants to improve operational efficiency, and for that, they are willing to collaborate or consolidate with other players in the industry. All parties, however, must get the same benefits.”
Dian Siswarini, president director of XL Axiata, said that his company is open to any kind of consolidation with other parties.
This strategic collaboration between the two giants will be a consolidation in the telecommunication market that is the fastest growing in the world. Last month Qatar’s Ooredoo QPSC and CK Hutchison Holdings Ltd had agreed to merge their telecom businesses in a transaction worth $6 billion. The state-owned PT Telekom in Indonesia is the largest operator in the most populated southeast Asian country.
According to Bloomberg News, in 2019, CK Hutchison, the Hong Kong conglomerate, had approached Axiata for a potential merger of their telecommunication operations.
As per the latest financial statement, XL Axiata has 5.8 million users as of June 30. The company has achieved a net income of 716 billion rupiahs and revenue of approximately 13 trillion rupiahs for six months ending in June.
Smartfren has 27.9 million users as per their latest annual report. It reported a revenue of 4.95 trillion rupiahs and a net loss of 452 billion rupiahs for the first half of 2021.