(From left) Axiata group executive director Dr Hans Wijayasuriya, group CEO Vivek Sood and group chief finance officer Nik Rizal Kamil Nik Ibrahim. (Photo by Patrick Goh/The Edge)

KUALA LUMPUR (May 30): Axiata Group Bhd (KL:AXIATA) aims to complete the merger of its Indonesian mobile unit XL Axiata with Smartfren Telecom by the end of 2024, its top executive said on Thursday.

Due diligence is ongoing, said group chief executive officer and managing director Vivek Sood at a press conference after Axiata’s annual general meeting. However, he acknowledged the merger would take time and there may be challenges in integrating the companies.

“You have to look at what the joint plans are there and prepare for the definitive agreements,” Vivek said. “The phase we are going through includes preparing the structure of the organisation, looking at the combined strategy” and potential synergies among others, he said.

Vivek is optimistic that the merger would boost the combined entity’s competitiveness in the Indonesia market and challenge existing leaders.

Currently, XL Axiata is the third largest player in Indonesia with about 57 million subscribers, while Sinar Mas’ PT Smartfren Telecom has an estimated subscriber base of 36 million. “The combined subscribers of both entities would make us closer to our competitors, " he said.

Two weeks ago, Axiata signed a non-binding agreement with conglomerate Sinar Mas to explore combining their Indonesian units. Both Axiata and Sinar Mas intend to remain joint controlling shareholders of the merged entity, the company said.

Axiata runs five main businesses in Indonesia — XL Axiata, Link Net, edotco, Boost and ADA. Axiata has been shedding assets and acquiring new ones as part of its efforts to boost profitability.

The company announced the sale of its businesses in Myanmar in April this year and Nepal in December last year. Axiata said subsidiary edotco Group Sdn Bhd would sell its Myanmar tower business for US$150 million or RM713 million, cash, citing worsening macroeconomic and operating environment.

Following the divestment in Myanmar, edotco will focus on growing its business in the Philippines and Indonesia, said Axiata’s group chief finance officer Nik Rizal Kamil Nik Ibrahim.

As of 4.15pm, shares in Axiata rose three sen or 1.1% to RM2.77, bringing the group a market capitalisation of RM25.43 billion.