Billionaire Widjaja Family’s Smartfren, Axiata In Talks To Merge Indonesian Telecom Business
![Billionaire Widjaja Family’s Smartfren, Axiata In Talks To Merge Indonesian Telecom Business Billionaire Widjaja Family’s Smartfren, Axiata In Talks To Merge Indonesian Telecom Business](https://i0.wp.com/imageio.forbes.com/specials-images/imageserve/66455b1c5922fb2a55e23ad7/0x0.jpg?format=jpg&height=900&width=1600&fit=bounds&w=780&resize=780,470&ssl=1)
A pedestrian uses his smartphone while walking on a sidewalk in Jakarta on February 28, 2019, past … [+]
Smartfren Telecom—controlled by billionaire Widjaja family’s Sinar Mas—said Wednesday it has signed a non-binding memorandum of understanding with Malaysia’s Axiata Group to explore a potential merger of their telecommunications business in Indonesia.
The proposed merger is still in the early stages of evaluation, with both parties conducting due diligence, Smartfren said in a regulatory filing to the Indonesia Stock Exchange. Should the discussion result in a business combination, both Axiata and Sinar Mas aim to remain major shareholders in the merged entity.
Indonesia—Southeast Asia’s largest economy—has four mobile phone carriers, the smallest of whom are XL Axiata and Smartfren. Combining the two companies will create a larger company with a combined subscriber base of about 94 million, giving the enlarged entity a stronger footing to compete with bigger rivals such as Indosat Ooredoo Hutchison which has 97 million subscribers and state-owned Telkomsel with 159 million subscribers.
The telecommunications industry has been consolidating in recent years amid fierce competition in Indonesia. In 2022, CK Hutchison Holdings and Qatar’s Ooredoo merged their Indonesian units in a deal worth $6 billion.
Smartfren has been grappling with losses and ballooning debts. While it recorded its first profit in two decades in 2022, the company again reported a net loss of 108 billion rupiah ($6.8 million) last year. Last month, the company said it will raise 8.5 trillion rupiah through a rights issue, most of the proceeds will be used to pay the company’s debt.
With a net worth of $10.8 billion, the Widjaja family ranked No. 4 on the list of Indonesia’s 50 Richest that was published last December. The family controls the Sinar Mas group which besides telecom, has interest in paper, financial services, real estate, agribusiness, and mining.
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