The Indonesian government has green-lit the acquisition by XL Axiata of smaller rival Axis Telekom – one of the first consolidation deals in the crowded mobile market.
One of the conditions for the approval included the pledge by both companies to…
The Indonesian government has green-lit the acquisition by XL Axiata of smaller rival Axis Telekom – one of the first consolidation deals in the crowded mobile market.
One of the conditions for the approval included the pledge by both companies to return 10 MHz of spectrum in the 2,100 MHz band. A selection process will take place to reallocate these frequencies.
However, the combined XL Axiata/Axis will be able to retain all of the 1,800 MHz spectrum and the balance of the 2,100 MHz contiguous spectrum.
In late September, XL Axiata, Indonesia’s second-largest mobile operator, agreed to acquire Axis for a symbolic cash consideration of US$100 plus the assumption of US$865m in debt.
The deal will see XL Axiata, 66.5%-owned by Malaysian giant Axiata, buy 95% of the Saudi Telecom (STC)-held operator. The remaining 5% will be owned by a local Indonesian shareholder in line with local regulations.
STC, which has an 80.1% direct stake in Axis, decided in July to sell the company because of its poor performance. A medium-sized carrier, Axis operates in a highly competitive mobile market, home to 10 companies.
As for XL Axiata, the main purpose of the acquisition is spectrum, according to analysts. “Without it, [XL Axiata] would’ve struggled a lot more,” Nomura said in a research note. “The benefits will accrue from capex savings, revenue share gains and overall better long-term market positioning.”
The transaction, subject to regulatory approval, is scheduled to complete by 31 March 2014.
