TEMPO.CO, Jakarta - The Indonesia Stock Exchange (IDX) opened its voice regarding the merger process between PT XL Axiata Tbk (EXCL) and PT Smartfren Telecom Tbk (FREN). IDX Director of Corporate Valuation I Gede Nyoman Yetna said that, based on existing regulations, the merger would make the FREN entity end legally after the merger is completed.

"In this case, merger between EXCL and FREN, based on the information disclosure submitted, FREN will merge into EXCL so that FREN will end by law," Nyoman said in his written statement, Thursday, December 12, 2024.

According to him, this is based on provision B.5 of Exchange Regulation No. I-G concerning Business Merger or Consolidation. Based on this regulation, he said the stock exchange would also notify and announce the possibility of delisting the shares of listed companies from the list of shares listed on the stock exchange.

In addition, Nyoman cited Law Number 40 of 2007 concerning Limited Liability Companies, article 9, which states that the merger results in the assets and liabilities of the merging Company transferring by operation of law to the surviving Company. Furthermore, the legal entity status of the merging Company ends by operation of law.

As is known, PT XL Axiata Tbk and PT Smartfren Telecom Tbk finally announced a merger agreement with a combined value of Rp104 trillion. Later, the combined entities will form PT XLSmart Telecom Sejahtera Tbk.

Axiata Group's Chief Executive Officer, Vivek Sood, said the XL Axiata entity will survive, while Smartfren and Smartel will merge into part of XLSmart. "Axiata Group Berhad and Sinar Mas will be the controlling shareholders, each holding 34.8 percent of XL Smart shares," Vivek said in his official statement on Wednesday, December 11, 2024.

Vivek said the two entities would complement each other in serving Indonesia's telecommunications market share. XLSmart will have the scale, financial strength, and expertise to drive digital infrastructure investment, expand service coverage, and drive customer innovation while creating a healthier and more competitive market.

Regarding the reason for the merger, XLSMart will reinvest in expanding 5G networks, network upgrades, and product innovation. "In addition, this merger is expected to generate significant cost synergies, with estimated pre-tax synergies of US$ 300-400 million after the completion of the strategic network integration process and resource optimization," Vivek said.

The boards have approved the merger process of directors of XL Axiata, Smartfren, and Smartel. However, it is still awaiting approval from regulators and shareholders. Thus, it is projected to be completed in the first half of 2025.

HAMMAM IZZUDDIN | MARTHA WARTA SILABAN

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