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XL-Smartfren merger would create powerful force, analyst says
Smartfren's high level of debt may be a challenge in the negotiation process.
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A pedestrian uses his smartphone while walking on a sidewalk in Jakarta on Feb. 28, 2019, past an advertisement for one of Indonesia's top-three mobile operators, XL Axiata. (AFP/Bay Ismoyo)
T
he Communications and Information Ministry has confirmed that two major telecommunication companies, XL Axiata and Sinar Mas Group-backed Smartfren, are in talks about a possible merger.
Analysts say a consolidation of those firms would improve revenue and profitability of the resulting entity. However, Smartfren's high level of debt may be a challenge in the negotiation process.
Unconfirmed reports about a planned merger between XL Axiata and Smartfren have emerged since 2021, and news agency Bloomberg reported recently that both companies had hired consultants to explore a potential merger process.
On Sept. 8, the communication ministry’s director general of public information and communications, Usman Kansong, confirmed that representatives of the two companies had met with the newly appointed minister, Budi Arie Setiadi, on separate occasions.
He refrained from disclosing details but said the meetings had been about a possible merger between the local carriers.
According to Usman, the ministry is pushing for consolidation in the sector to improve service providers’ financial conditions.
"We want to contain the dynamics, so that the market will not be too competitive, as that would be dangerous," he stated.
