Jakarta. Cellular operators XL Axiata (EXCL) and Smartfren Telecom (FREN) are set to merge in April next year with the aim of increasing operational efficiency and reducing costs.

The planned merger will also include Smartfren’s subsidiary, Smart Telecom (ST).

“XL will act as the acquiring company, and both Smartfren and ST will be dissolved in accordance with legal requirements following the completion of the merger process,” XL stated in a public announcement published by Investor Daily newspaper on Wednesday.

The merger will result in the formation of a new entity named XL Smart Telecom Sejahtera, effective from April 15.

Axiata Investments currently holds a 66.53 percent stake in XL Axiata, with the remaining shares owned by the public.

Meanwhile, Bali Media Telekomunikasi is the largest shareholder of Smartfren, holding 41.17 percent of shares, followed by public shareholders (22.5 percent), Global Nusa Data (16.74 percent), Wahana Inti Nusantara (10.22 percent), and Gerbangmas Tunggal Sejahtera (9.36 percent).

Post-merger, the shareholding composition will include Axiata Investments (34.8 percent), public shareholders (30.4 percent), Bali Media Telekomunikasi (24.6 percent), Global Nusa Data (4.7 percent), Wahana Inti Nusantara (2.9 percent), and Gerbangmas Tunggal Sejahtera (2.6 percent).

The merger is set to realize significant cost synergies, with an estimated annual run-rate pre-tax synergies of $300 million to $400 million post-integration completion, through strategic network integration and resource optimization.

At completion, shareholding equalization will result in Axiata receiving up to $475 million. At transaction closing, Axiata will receive $400 million, along with an additional $75 million at the end of the first year, contingent on meeting specific conditions.

In addition to being the beneficial owner of XL Axiata in Indonesia, Axiata Investments also holds controlling interests in mobile operators in Malaysia, Sri Lanka, Bangladesh, and Cambodia, with significant strategic stakes in Pakistan, Nepal, Myanmar, Laos, Thailand, and the Philippines.

Axiata’s mobile subsidiaries and associates operate under the brand names Celcom (Malaysia), XL (Indonesia), Dialog (Sri Lanka), Ncell (Nepal), Robi (Bangladesh), and Smart (Cambodia).