Indonesian mobile network operator XL Axiata is on track to finalise its takeover of fellow carrier PT Axis Telekom Indonesia (Axis) by February 2014, with the deal set to be mainly financed through loans from its parent company. According to XL Axiata president director, Hasnul Suhaimi, as reported by The Jakarta Post, up to 58% of the cost of the acquisition will be funded via a loan from Axiata Group Berhad. The Malaysian parent group owns 66.5% of XL Axiata via Axiata Investments (Indonesia). The remaining 33.5% is publicly owned. ‘We will seek loans from financial firms to cover the remaining costs. However, we are still reviewing which banks, either domestic or foreign, to approach,’ Hasnul added.
The total value of the conditional sale and purchase agreement between XL Axiata and Axis Indonesia is USD865 million. Hasnul notes however, that the enlarged entity could save up to USD600 million through the merger, as a result of cost efficiencies related to network usage. ‘For example, we would gain access to the 15MHz of spectrum belonging to Axis on the 1800MHz frequency without having to participate in auctions for spectrum allocation,’ he said. Nonetheless, it will be a tricky ride to take the unit into the black. Axis Indonesia has been loss-making for many years and its liabilities have reached IDR21.7 trillion (USD1.78 billion), while its equity is a negative IDR13.6 trillion (in 9M13), on losses of IDR7.3 trillion in the nine-month period and IDR5.5 trillion in FY2012.