Indonesia’s telecommunications market is experiencing rapid growth, and the Widjaja family’s Smartfren Telecom has recently signed a non-binding memorandum of understanding with Axiata Group to explore a potential merger. The proposed merger would create a larger entity with a combined subscriber base of about 94 million, allowing the companies to compete more effectively with their larger rivals like Indosat Ooredoo Hutchison and state-owned Telkomsel.
The Indonesian telecommunications industry has been seeing significant consolidation in recent years due to intense competition. In 2022, CK Hutchison Holdings and Qatar’s Ooredoo merged their Indonesian units in a deal valued at $6 billion. Despite recording its first profit in two decades in 2022, Smartfren has been facing losses and increasing debts. In 2021, the company reported a net loss of 108 billion rupiah ($6.8 million) and subsequently announced plans to raise 8.5 trillion rupiah through a rights issue to pay off debts.
Smartfren Telecom is currently controlled by the Widjaja family’s Sinar Mas, which has interests in paper, financial services, real estate, agribusiness, and mining. If the merger goes through, both Axiata and Sinar Mas aim to remain major shareholders in the merged entity. The discussion is still in its early stages of evaluation, with both parties conducting due diligence before making any final decisions about whether or not to proceed with the merger.
The Widjaja family is one of Indonesia’s wealthiest families, with a net worth of $10.8 billion as ranked No. 4 on Indonesia’s list of 50 Richest individuals. The proposed merger would allow them to further consolidate their control over the Indonesian telecommunications market while also providing increased opportunities for growth and expansion for both companies involved.
In conclusion, Smartfren Telecom and Axiata Group have signed a non-binding memorandum of understanding to explore a potential merger that could create a larger entity with increased market strength and competitiveness in Indonesia’s telecommunications industry. While still early stages of evaluation are underway, if successful
