Indonesian telcos merge to create XLSmart

• XL Axiata and Smartfren’s merger forms XLSmart, making it Indonesia’s third-largest telecom operator with 94.5 million subscribers.
• The deal enhances competition and supports Indonesia’s digital transformation through improved connectivity and innovation.

What happened: XL Axiata and Smartfren join forces to strengthen Indonesia’s 5G landscape

XL Axiata and Smartfren have signed a $6.5 billion merger agreement, creating a new telecom entity called XLSmart. This merger consolidates their operations, with XLSmart starting as the third-largest telecom operator in Indonesia. The new entity will have an estimated 94.5 million subscribers and a 27% market share, rivaling leading operators Telkomsel and Indosat Ooredoo Hutchison. The deal is expected to close by mid-2025, with both companies confident of regulatory approval.

The merger will see Smartfren and its subsidiary absorbed into XL Axiata. Parent companies Axiata Group and Sinar Mas will jointly control XLSmart, each holding a 34.8% stake. To balance ownership, Axiata will receive $475 million over two installments, with part of the payment contingent on the first year of operations.

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Why it’s important

The merger between XL Axiata and Smartfren to form XLSmart signifies a pivotal moment in Indonesia’s telecommunications sector. By consolidating resources, XLSmart can invest heavily in advanced technologies, particularly in accelerating 5G deployment. This supports the government’s ambitions to make Indonesia a regional leader in digital connectivity and innovation.

Moreover, the formation of XLSmart introduces a stronger competitor to challenge the dominance of Telkomsel and Indosat Ooredoo Hutchison. Increased competition can lead to more affordable services and better customer experiences for Indonesian consumers. XLSmart’s large subscriber base and projected synergies also set the stage for more efficient operations, reducing costs while expanding coverage in underserved regions.

On a broader scale, this merger emphasizes Indonesia’s growing importance in the global digital economy. As digitalization becomes central to economic growth, robust telecom infrastructure is critical for enabling e-commerce, remote work, and tech-driven industries, all of which will benefit from a strengthened XLSmart network.