Axiata Group, Sinar Mas in MOU to explore merger of XL Axiata and Smartfren in Indonesia

• Both parties intend to remain as joint controlling shareholders of MergeCo
• Significant value to arise from combined scale, competencies, finances and expertise

Axiata Group Bhd and PT Wahana Inti Nusantara (WIN); PT Global Nusa Data (GND); and PT Bali Media Telekomunikasi (BMT) (collectively referred to as Sinar Mas) (Axiata and Sinar Mas collectively referred to as the Parties and each a Party) announced on 15 May that they have entered into a non-binding MOU to mutually explore a proposed merger of XL Axiata and Smartfren to create a new entity (MergeCo).The proposed transaction is at an early stage of evaluation with both Axiata and Sinar Mas intending to remain as joint controlling shareholders of MergeCo.

The Parties point out that there is no certainty that the ongoing discussions between them will result in the entry into any binding agreement nor the completion of the proposed transaction. Validation of merger rationale and value creation to shareholders, due diligence, preparation of a joint business plan and agreement on key terms will be the principal activities carried out during the exploratory phase governed by the non-binding MOU. Any key development in relation to this MOU will be announced as required. In the event a binding agreement is to be entered into at a future point in time, the associated transaction will be subject to, among others, regulatory and corporate approvals.

With the intent to create a stronger telecommunications service provider in Indonesia, the proposed merger of XL Axiata and Smartfren is expected to bring together the combined scale, competencies, finances and deep telecommunication expertise of Axiata and the local scale and market knowledge of Sinar Mas to generate significant value. Both principals are expected to wield an equitable influence over the strategic direction and operational decisions of MergeCo.

Axiata believes that MergeCo will have the strategic agility, competence, and scale to meet increasing expectations and demand from consumers, businesses, and the Indonesian public sector. MergeCo is expected to deliver superior customer experience in the telecommunications sector and create additional shareholder value including through synergies from the combined operations of XL Axiata and Smartfren.

Axiata emphasized that it is committed to remaining a leading player in Indonesia's digital and technology landscape, supporting the country's digital future. Indonesia is an important market and key to its strategic initiatives. XL Axiata is Axiata’s largest asset and from a portfolio standpoint, Indonesia is the highest value creator, where it runs five main businesses - XL Axiata, Link Net, EDOTCO, Boost and ADA.