In a filing with Bursa Malaysia today, the telecommunications group said the proposed merger between Axiata’s XL and Sinar Mas’ Smartfren is at an early stage of evaluation.
It said both Axiata and Sinar Mas intend to remain as joint controlling shareholders of MergeCo.
“There is no certainty that the ongoing discussions between the parties will result in the entry into any binding agreement nor the completion of the proposed transaction.
“Validation of merger rationale and value creation to shareholders, due diligence, preparation of a joint business plan, and agreement on key terms will be the principal activities carried out during the exploratory phase governed by the non-binding MoU,” it added.
Axiata said any key development in relation to this agreement will be announced as required.
“In the event that a binding agreement is to be entered into at a future point in time, the associated transaction will be subject to among others, regulatory and corporate approvals.
“With the intent to create a stronger telecommunications service provider in Indonesia, the proposed merger of XL Axiata and Smartfren is expected to bring together the combined scale, competencies, finances, and deep telecommunication expertise of Axiata and the local scale and market knowledge of Sinar Mas to generate significant value,” it said.
The group said both principals are expected to wield an equitable influence over the strategic direction and operational decisions of MergeCo, bolstered by their respective strengths.
It said that MergeCo will have the strategic agility, competence, and scale to meet the increasing expectations and demand from consumers, businesses and the Indonesian public sector.
“MergeCo is expected to deliver superior customer experience in the telecommunications sector and create additional shareholder value, including through synergies from the combined operations of XL Axiata and Smartfren,” it said.
Axiata said Indonesia is an important market and key to its strategic initiatives.
“From a portfolio standpoint, Indonesia is the highest value creator, where Axiata runs five main businesses, namely XL Axiata, Link Net, Edotco, Boost, and ADA,” it said, adding that XL Axiata is the group’s largest asset.
At the close of trading. Axiata’s share price was up 1 sen or 0.35% at RM2.83, giving the group a market capitalisation of RM25.98 billion.