Smartfren Telecom, controlled by billionaire Widjaja family member Sinar Mas, said on Wednesday it has signed a non-binding memorandum of understanding with Malaysia's Axiata Group to explore a possible merger of its telecom businesses in Indonesia. Announced.
Smartfren said in a regulatory filing to the Indonesia Stock Exchange that the proposed merger is still in the early stages of evaluation and both parties are conducting due diligence. If the discussions result in a business combination, both Axiata and Sinar Mas aim to remain major shareholders after the merger.
Indonesia, Southeast Asia's largest economy, has four mobile phone operators, the smallest of which are XL Axiata and Smartfren. The merger of the two companies will create a larger company with a combined subscriber base of approximately 94 million people, including Indosat Ooredoo Hutchison with 97 million subscribers and state-owned Telkomsel with 159 million subscribers. This will give it a stronger platform to compete with larger rivals such as .
Amid intense competition in Indonesia, the telecommunications industry has been consolidating in recent years. In 2022, CK Hutchison Holdings and Qatar's Ooredoo merged their Indonesian units in a deal worth $6 billion.
Smartfriend is struggling with losses and mounting debt. The company posted its first profit in 20 years in 2022, but again reported a net loss of 108 billion rupiah ($6.8 million) last year. The company announced last month that it had raised Rp 8.5 trillion through a rights issue, with most of the proceeds going to pay down debt.
With a net worth of $10.8 billion, the Widjaja family was ranked fourth on the list of Indonesia's 50 richest people released in December last year. In addition to telecommunications, the family runs the Sinar Mas Group, which has interests in paper manufacturing, financial services, real estate, agribusiness and mining.