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Axiata Group and Sinar Mas have recently revealed their collaboration through a non-binding Memorandum of Understanding (MoU) to jointly consider merging XL Axiata and Smartfren, aiming to establish a new entity named MergeCo.

This potential merger is currently in its initial evaluation phase, with both Axiata and Sinar Mas expressing their intent to continue as joint controlling shareholders of MergeCo.

The ongoing discussions between Axiata Group and Sinar Mas do not guarantee the eventual formation of a binding agreement or the completion of the proposed merger.

During this exploratory phase governed by the non-binding MOU, key activities such as validating the merger rationale, assessing shareholder value creation, conducting due diligence, preparing a joint business plan, and agreeing on essential terms will be prioritized. Any significant developments concerning this MOU will be disclosed as necessary. If a binding agreement is reached in the future, the transaction will be subject to various approvals, including regulatory and corporate consent.

The proposed merger of XL Axiata and Smartfren aims to establish a stronger telecommunications service provider in Indonesia. By combining the strengths of both entities, including their scale, capabilities, financial resources, and telecommunications expertise, Axiata and Sinar Mas anticipate significant value creation. Both parties are expected to have an equitable say in the strategic direction and operational decisions of MergeCo, leveraging their respective strengths.

Related: XL Axiata and Smartfren Explore Merger for Joint Indonesian Telecom Operations

Axiata is confident that MergeCo possesses the strategic flexibility, expertise, and size necessary to meet the growing demands and expectations of consumers, businesses, and the public sector in Indonesia.

MergeCo is anticipated to enhance the telecommunications sector by offering an exceptional customer experience and generating additional value for shareholders, including synergies from integrating the operations of XL Axiata and Smartfren.

Also Read: Axiata’s Majority Operators Experience Growth Despite Q3 Loss

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