Axiata Group will restructure XL Axiata, Link Net to chase FMC dollar

Axiata Group will restructure XL Axiata and Link Net to chase FMC dollar

Axiata Group announced Wednesday that it will restructure its Indonesian subsidiaries XL Axiata and Link Net to better take advantage of growing demand for fixed broadband and fixed mobile convergence (FMC) services.

To that end, mobile operator XL Axiata and fixed-broadband player Link Net have reached non-binding agreements under which Link Net will transfer its business – including its 750,000 customers – to XL Axiata. Link Net will also roll out an additional 2 million new homes passed.

Once the dust settles, Link Net will continue as a wholesale fibre company covering nearly 6.5 million homes, while XL Axiata will be the second largest fixed broadband operator in Indonesia (behind Telkomsel’s IndiHome) with 1 million customers.

This in turn will put both companies on solid ground to chased the fixed broadband and FMC markets, said XL Axiata’s president director and CEO Dian Siswarini.

“The vast pick-up in demand for FBB and FMC services strongly affirms our strategic direction. We believe the collaboration between XL Axiata and Link Net will allow us to capture this greater demand and drive the acceleration of growth of FBB and FMC services in Indonesia,” he said. “By expanding our network infrastructure and extending service availability, we will effectively reach the broader Indonesian community, catering to their evolving convergence needs and preferences for a suite of both fixed, mobile and content services.”

Earlier this month, XL Axiata credited its fast growing FMC business for driving growth in revenues and normalized net profit in its 9-month results for 2023.

In April this year, mobile operator Telkomsel signed an agreement with parent company Telkom Indonesia to merge with its broadband arm IndiHome, in part to boost Telkom’s fixed broadband and FMC offerings.

Axiata Group CEO and MD Vivek Sood said the move is part of its “delayering” strategy to make both companies more agile, scalable and attractive to relevant partners.

"Through this strategic approach, both XL Axiata and Link Net will expedite the growth potential of their respective businesses,” he said. “XL Axiata stands to benefit from expanded access to extensive fibre optics infrastructure with minimum investment. Meanwhile, Link Net will concentrate its efforts on expanding infrastructure to meet the thriving market demand, positioning it for increased market significance.”

XL Axiata and Link Net will proceed to set out a binding agreement for the terms. Meanwhile, Dian said, “we are in the process to explore a carve-out of our own built last-mile fibre homes passed for better utilisation of assets in line with our ‘Asset Light’ Strategy.”

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