KUALA LUMPUR (March 25): Axiata Group Bhd (KL:AXIATA) said shareholders of PT XL Axiata Tbk (XL Axiata), PT Smartfren Telecom Tbk and PT Smart Telcom (SmartTel) have approved the proposed merger to establish Indonesia’s third-largest telecommunications company by subscriber base.

The shareholders of the three Indonesian telcos approved the proposal at their respective extraordinary general meetings (EGMs) held on Tuesday, according to Axiata's filing with Bursa Malaysia.

This comes a day after Axiata shareholders gave their nod to the merger plan at the group's EGM.

Under the proposal, Smartfren and its subsidiary SmartTel will be transferred to XL Axiata.  

XL Axiata will issue 5.07 billion new shares at 2,350 rupiah (65.57 sen) per share, or a total of 11.917 trillion rupiah (RM3.33 billion), to acquire the entities.

In December last year, Axiata entered into an agreement with Indonesia's Sinar Mas Group to proceed with the merger. It was announced that the newly formed entity will be named PT XLSmart Telecom Sejahtera Tbk (XLSmart), with Axiata and Sinar Mas each holding a 34.8% stake as joint controlling shareholders, while public shareholders will own the remaining 30.4%.

To achieve the joint controlling shareholdings of Axiata and Sinar Mas, the deal will also see Axiata Investment (Indonesia) Sdn Bhd dispose of 2.38 billion shares in XLSmart to PT Bali Media Telekomunikasi — a substantial shareholder of Smartfren — for a cash consideration of US$475 million (RM2.10 billion).

Axiata has said that it intends to use the US$475 million arising from the shareholding equalisation to primarily pare down debt.

XLSmart is set to serve a combined mobile subscriber base of 94.51 million, representing 27% of Indonesia's market share.

Shares of Axiata closed seven sen or 4.1% higher at RM1.78 on Tuesday, giving the group a market capitalisation of RM16.35 billion. Year-to-date, the stock has fallen 28.5%.

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