XL Axiata, one of the largest mobile-phone operators in Indonesia, has obtained a $500 million loan from its holding company, Malaysia’s Axiata Group that will be used to finance the acquisition of Axis Telekom Indonesia.
The loan will have 2.41 percent interest rate for the next three years, according to a prospectus published in Bisnis Indonesia on Tuesday.
Axiata Group holds a 66.5 percent stake in Jakarta-based XL Axiata. Last September, XL Axiata agreed to buy a controlling stake in Axis from Saudi Telecom Company’s unit, Teleglobal Investment for $865 million, when it signed a deal with the Saudi telecommunications giant. In addition to the loan from Axiata, XL will seek bank loans to fund the balance of the acquisition.
On Monday, XL Axiata finally secured approval from Indonesia’s antimonopoly commission (KPPU) for its merger with Axis Telekom Indonesia after a long, drawn-out process.
KPPU’s approval indicates that the acquisition might be finalized by the end of this month.
The Financial Services Authority (OJK), which monitors listed companies such as XL Axiata, and the company’s shareholders have also approved the merger. The Ministry of Communications and Information Technology gave its approval last month.
XL Axiata, the second-largest telecommunication company in the country, will gain 13.3 million cellular subscribers from the acquisition to add to its current base of approximately 60.5 million.
Indonesia’s mobile-phone sector is dominated by three operators: Telekomunikasi Indonesia or Telkomsel, XL Axiata, and Indosat, a local unit of Qatar-based Ooredo.
Telkomsel had approximately 131.5 million subscribers as of December last year, while Indosat had 55 million.
Meanwhile, one of the smaller operators, Smartfren Telecom, is preparing $100 million in funds to finance expansion this year, in a bid to add more subscribers.
Smartfren, controlled by the Sinar Mas Group, was reported to have had around 11 million users by the end of 2013.