The billionaire Vidyadhara family, Smartfren, and Axiata are in talks about merging their Indonesian telecommunications business.

In Jakarta, on February 28, 2019, a pedestrian is using a smartphone while passing by an advertisement board of one of Indonesia's mobile operators, XL Axiata. Smartfren Telecom, owned by the Widjaja family from Sinar Mas, announced on Wednesday that it has signed a non-binding memorandum of understanding with Malaysian operator Axiata Group. The purpose of this agreement is to explore the possibility of merging their telecommunications businesses in Indonesia. Currently, the discussions are at an initial stage, with both parties conducting the necessary checks and assessments, as stated in Smartfren's official announcement to the Indonesian Stock Exchange. If the discussions lead to a real merger of the companies, both Axiata and Sinar Mas expect to maintain their status as major shareholders in the new combined structure.

Indonesia, the largest economy in Southeast Asia, has four mobile operators, among which the smallest are XL Axiata and Smartfren. The merger of these two telecommunications giants could create a more powerful company with a combined subscriber base of around 94 million people.

In recent years, Indonesia's telecommunications industry has evolved through mergers and acquisitions, which has been a response to increasing competition. For example, in 2022, CK Hutchison Holdings and Qatar's Ooredoo merged their Indonesian divisions in a deal worth $6 billion. Inside Smartfren, things are not looking good: the company is facing losses and rising debts. Although in 2022 it managed to turn a profit for the first time in two decades, last year it recorded a net loss of 108 billion rupiah (about $6.8 million) again.

Last week, Smartfren announced a plan to raise 8.5 trillion rupiah through a rights issue, with most of the proceeds intended for debt repayment. The Widjaja family, which has a fortune of...10.8 billion dollarsShe ranked 4th in the list of the 50 richest people in Indonesia, published last December. This family controls the Sinar Mas group, which, in addition to telecommunications, also has interests in paper production, financial services, real estate, agribusiness, and mining.