Franky Widjaja: XL Axiata-Smartfren Merger to Generate $1.5 Billion in Cost Efficiency

JAKARTA, investortrust.id – Sinarmas Group’s Chairman Franky Oesman Widjaja stated that the merger of PT XL Axiata Tbk, or EXCL, and PT Smartfren Telecom Tbk, or FREN, is expected to generate $1.5 billion in cost efficiency over the next five years, averaging $300 million per year.

XL Axiata and Smartfren recently announced a definitive merger agreement, with a combined pre-synergy enterprise value of more than Rp 104 trillion ($6.5 billion). XL Axiata will be the surviving entity under the new name PT XLSmart Telecom Sejahtera Tbk (EXCL).

"In five years, XLSmart Telecom can achieve savings of $1.5 billion, with the process taking approximately two years to materialize. The merger will also improve services and reduce operational costs," Widjaja said after participating in a market dialogue titled Soliditas dan Sinergi Pemangku Kepentingan Pasar Modal (Solidarity and Synergy Among Capital Market Stakeholders) at the Indonesia Stock Exchange (BEI) building in Jakarta on Monday, March 3, 2025.

Strengthening Fundamentals and Efficiency

Widjaja added that the substantial cost savings from the merger are expected to strengthen the financial performance and fundamentals of the newly combined company.

Following the merger, Axiata Group Berhad and Sinarmas will become joint controlling shareholders, each holding a 34.8% stake with equal influence over the company’s strategic direction.

Axiata is projected to receive up to $475 million from the transaction, including an initial payment of $400 million and an additional $75 million at the end of the first year, contingent on meeting certain conditions.

With the merger in place, XLSmart Telecom is expected to solidify its position in Indonesia’s telecommunications sector, driving digital transformation and enhancing connectivity for both consumers and businesses.

XL Axiata Prepares for Major Dividend Distribution

Separately, XL Axiata announced an extraordinary general meeting of shareholders (EGMS) scheduled for March 25, 2025, at the Indonesia Stock Exchange. The agenda includes shareholder approval for the merger, amendments to the company’s articles of association, a corporate name change to XLSmart Telecom Sejahtera, board restructuring, and approval of controlling shareholders following the merger.

The EGMS will also address the company’s share buyback plan for dissenting shareholders and finalize the merger deed.

Additionally, XL Axiata’s annual general meeting (AGM), scheduled on the same day, will decide on the allocation of its 2024 net profit. The company is expected to distribute a substantial dividend, potentially double the payout from the previous year. In 2023, XL Axiata reported a net profit increase to Rp 1.84 trillion.