Sale of STC’s Axis Telekom to Axiata approved

Asian operator group Axiata’s Indonesian unit has gained regulatory approval to acquire Axis Telekom, the Saudi Telecom-owned operator, creating Indonesia’s second-largest player.

The deal has been given the green light by the KPPU, the Indonesian antitrust body, meaning it has fulfilled the final requirement for the deal to go through.

The Ministry of Communications and Informatics cleared the deal last December, while XL Axiata shareholders approved the merger in February.

An XL Axiata statement said the KPPU decided the merger would not constitute a monopoly as the combined company would only have a 21 per cent market share (65 million subscribers).

The deal was first agreed with Axis owner Saudi Telecom in September last year. The agreement covers 95 per cent of Axis shares with an Indonesian shareholder holding a five per cent stake in accordance with Indonesian foreign investment rules. The transaction values Axis at US$865 million on a cash-free and debt-free basis.

XL Axiata outlined a US$500 million loan arranged with its parent group to finance the purchase. Axiata owns a 66.5 per cent stake in XL.

XL said the merger will “improve the service quality and provide better and wider network coverage with higher capacity as well as wider product and customer service in the market”.

According to GSMA Intelligence figures, XL Axiata had 60.5 million connections at the end of 2013, with Axis on 17.8 million connections. The combined company would therefore count 78.3 million connections, giving it the number-two spot in Indonesia.

Market leader Telkomsel had 131.5 million connections, with current number two Indosat on 59.6 million connections. Hutchison Whampoa’s 3 had 32 million connections.