The owners of PT XL Axiata and PT Smartfren Telecom are working with advisers to help weigh a potential transaction, the source said, asking not to be identified since the matter is confidential.

Among the other options under consideration are network-sharing agreements and partnerships.

XL Axiata shares have climbed about 18% this year, valuing the firm at US$2.2 billion (RM10.26 billion). Smartfren’s stock has dropped about 18%, valuing the company at about US$1.2 billion.

“Deliberations are at a preliminary stage and there is no certainty a deal will be reached,” cautioned the source.

In a follow-up on this matter, Smartfren president director Merza Fachys said he would wait and see the progress of the discussion, while a representative for Sinar Mas referred the request to Smartfren.

Meanwhile, a representative for XL Axiata refused to comment on the speculation.

A spokesperson from Axiata said the group is always on the lookout for collaborations and strategic partnerships with the hope to grow sustainably throughout its geographic footprint.

Having said this, the renewed talks between Axiata and Sinar Mas would follow other unsuccessful attempts in previous years, as reported by Bloomberg News.

XL Axiata had 58 million subscribers as of June 30, according to its latest financial presentation.

Axiata owns about 66% of the firm. Smartfren, a unit of Sinar Mas, had 36 million customers as of the end of 2022, according to its annual report.

The Indonesian telecommunications market has recently been consolidating.

Last year, CK Hutchison Holdings Ltd and Qatar’s Ooredoo merged their Indonesian telecom businesses in a US$6 billion (RM26.86 billion) transaction as they sought to fend off competition in Southeast Asia’s biggest market by subscribers.

As at 4.32pm, Axiata Group’s share price was down by 5 sen (2%) at RM2.45, giving it a market capitalisation of RM22.49 billion