XL Axiata Axis Capital
XL Axiata Green-Lighted For Merger Plan With Axis
Indonesia’s antimonopoly commission has approved a planned merger by XL Axiata and Axis Telekom Indonesia, the latest of such approvals after other regulators made gave their go-ahead.
“XL Axiata has secured approval from KPPU on March 6,” Murni Nurdini, XL’s corporate secretary said, referring to the antimonopoly commission by its Indonesian name in a statement on Monday.
The KPPU has reason to be wary of monopolies in the industry, after finding six telecommunications companies guilty of collusion to fix SMS prices in 2008, dishing out fines worth $10 million.
The approval should help boost confidence among XL Axiata’s management that the merger may be concluded by the end of this month.
The approval is the latest after it obtained approval from the Ministry of Communications and Information Technology in February last month.
The Financial Services Authority (OJK) has also okayed the merger plan. The OJK supervises listed companies, including XL Axiata. Shareholders have also given their nod to the plan.
“We are grateful for the KPPU’s support to the merger and acquisition plan. It is a crucial milestone for consolidation of the national telecommunications industry,” said Hasnul Suhaimi, president director of XL Axiata.
“By obtaining the approval from KPPU, we have complied with all the regulatory requirements in the conditional sale and purchase agreement. An XL – AXIS merger will provide substantial benefits for customers, as well as creating a healthier ecosystem in the telecommunications industry,” Hasnul said.
He said the merger will not trigger any monopolistic practices. “The total post-merger subscribers of XL Axiata-Axis will reach more than 65 million, which represents approximately 21 percent of the market. The figure is still far below the market share of other operators in Indonesia,” said Hasnul, a veteran in the telecommunications sector.
The Jakarta-based XL Axiata, which is indirectly controlled by Malaysia’s Axiata Group (66.5 percent), has signed a deal with Saudi Telecom Company, the existing owner of Axis.
Under the merger agreement, XL Axiata will buy a 95 percent stake in Axis through a $865 million transaction.
XL Axiata has announced that it will source $500 million for the acquisition from its Malaysian parent, while the remaining will come from bank loans.
The nation’s mobile phone sector is dominated by three operators, Telekomunikasi Indonesia, XL Axiata and Indosat, a local unit of Qatar-based Ooredo.