BUSINESS

AXIATA HOPES TO COMPLETE PROPOSED MERGER EXERCISE WITH PT SINAR MAS BY YEAR-END

30/05/2024 06:01 PM

KUALA LUMPUR, May 30 (Bernama) -- Axiata Group Bhd is hoping the proposed merger excercise between its wholly owned Indonesian subsidiary PT XL Axiata Tbk and PT Smartfren Telecom Tbk, a subsidiary of PT Sinar Mas, could be concluded by the end of this year.

Group chief executive officer and managing director Vivek Sood said that based on past experience, the group is optimistic on the timeline but the merger excercise usually takes some time as both parties need to know more about their future partner. 

“We still have to work with more details of the other party in terms of work structure, work value proposition, synergy etc. That’s the phase that we are going through, which includes due diligence of preparing the structure of the organisation.

“As things developed, we have come close to signing the definitive agreement on the transaction. We will come up with more details (in the near future),” he told reporters after the group's 32nd annual general meeting (AGM) here today.  

Vivek said Axiata is continuing with structural transformation in Indonesia, accelerating the transformation of XL Axiata into a converged ServeCo and Link Net into a pure-play FibreCo, and capitalising on the synergies between the two operations. 

Recently, the group has entered into a non-binding memorandum of understanding (MoU) with PT Sinar Mas to mutually explore a proposed merger of XL Axiata and Smartfren Telecom to create a new entity (MergeCo).

XL Axiata is Axiata’s largest asset within its Indonesian portfolio and is the third largest telecommunications company in the country with 58 million subscribers. 

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 in a statement.

Meanwhile, guided by Axiata’s "5 portfolio strategies and 5 strategic priorities", Vivek said Axiata is set to strengthen its portfolio, unlock value and seize new opportunities to foster balance between sustainable business growth and profitability with the objective of delivering sustainable dividends to our shareholders.

“Axiata has rapidly implemented our strategy with a series of corporate exercises in the financial year ended Dec 31, 2023 (FY2023) and continuing into FY2024. Our key associate company, CelcomDigi, completed its first full year as a merged company and delivered on the projected merger synergies, contributing a RM530.6 million share of profit for FY2023. 

“The focus is now on further accelerating the synergies from post-integration costs and capitalising on the benefits of market consolidation and on our market leadership," he said

In its frontier markets, Vivek said Axiata has led industry consolidation in Sri Lanka, with its operating company (OpCo), Dialog, acquiring a 100 per cent stake in its smaller competitor Airtel Lanka. 

Post integration, he said Dialog is expected to deliver higher topline growth, expand margins and increase profitability, with the opportunity for higher dividends, resulting in higher returns of value to shareholders. 

“In 4Q 2023, we also completed our exit from Nepal through the sale of our local OpCo, Ncell, amidst an increasingly challenging operating environment," he said.

In infrastructure business, Vivek said EDOTCO expanded in the Philippines by acquiring 2,710 towers from PLDT and also successfully refinanced US$700 million of short-term debt with a longer-term loan.

EDOTCO also entered into a share purchase agreement to sell its operations in Myanmar in April 2024.

“As we move forward with a firm focus on value creation for our shareholders, our priority will be to continue capitalising on the opportunities created through the 5-by-5 portfolio and business strategy and developing a balanced growth and profitability portfolio,” he added.

-- BERNAMA

 

 


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