Axiata Group Berhad (AXIATA) Status Update summary

Strategic rationale and merger overview

• The merger creates a leading digital telecom player in Indonesia, transforming the market into a three-player structure and supporting Axiata's 5x5 Strategy for strategic and structural transformation.

• The combined entity, XLSmart, will have a pre-synergy enterprise value of over IDR 104 trillion ($6.5 billion), a subscriber base of approximately 94.3 million, and a 25% market share.

• The partnership leverages Axiata's digital expertise and Sinar Mas's local ecosystem, enhancing scale, competitiveness, and resilience.

• Joint control will be established between Axiata and Sinar Mas, each holding a 34.8% stake in the merged entity.

• The merger aligns with operational excellence, market repair, and consolidation for improved ROIC.

Financial performance and impact

• FY24 saw EBIT growth of 39.3%, RM 2.5 billion net debt reduction, and net debt to EBITDA dropping to 2.74 times.

• XL's 2024 revenue grew 6% to IDR 34.4 trillion, with EBITDA margin at 52% and net profit up 45% year-on-year.

• Pro forma revenue for the merged entity is IDR 45.8 trillion, with EBITDA at IDR 22.5 trillion and a 25% market share.

• Value accretion of about $200 million to Axiata, with total value to Axiata at $1.4 billion post-transaction.

• Improved financial resilience, lower gearing, and reduced net debt/EBITDA are expected post-merger.

Transaction structure and timeline

• XL Axiata will remain the listed entity, issuing new shares to Smartfren shareholders as per a 72:28 equity value split.

• Sinar Mas will acquire an additional 13.1% stake in XL Smart from Axiata for $475 million, resulting in equal joint control.

• The transaction is expected to close in the first half of 2025, pending regulatory and shareholder approvals.

• Key regulatory and shareholder approvals are scheduled between December 2024 and March 2025, with EGMs for both companies in March 2025.

• Dividends for 2025 are proposed at IDR 1,120 billion (62% payout), to be paid before the merger effective date.