DEPOK (eNBe Indonesia) - Shares of cellular firm Smartfren Telecom (FREN), owned by Sinarmas Group, lost 3.23% to Rp60 per share on Friday last week (September 15), to make market capitalization of Rp20 trillion.
While, it is reported that a crossing transaction through negotiated market occurred in FREN on Friday at value of Rp1.32 trillion or Rp79 per share, above its regular market price.
Along with a cross transaction also occurred in Dian Swastika Sentosa (DSSA), also owned by Sinarmas Group, at value of Rp1.77 trillion or Rp48,000 per share, equal to its regular market’s price.
There is no report or disclosure yet on what parties involved in said cross transaction both FREN and DSSA.
Media earlier reported that FREN intends to merging with XL Axiata (EXCL). Since 2021, Smartfren teased XL regarding the merger of the two companies. Said merge is expected to increase telecommunications in Indonesia.
This is to happen, as the consolidation between Indosat Ooredoo (ISAT) and Tri Hutchison had happened in September 2021.
With merging, FREN will benefit, have a large customer base and infrastructure, and be more competitive with other larger telco operators.
The margin will be improved, so as the profitability. Given pressures on Sinarmas Group’s other business segments, particularly plantation (palm oil), property, finance, and mining (and energy) in recent years, people continue to speculate on the future of SmartFren.
Some meanwhile believe that merger of FREN and EXCL would only benefit XL, getting additional networks and new customers.
Then XL has the potential to displace Indosat (ISAT), ranked second in the Indonesian market. Quoted from Bloomberg, XL Axiata and Smartfren are working with advisors to help consider potential transactions.
Apart from mergers, other options being considered are network sharing agreements and partnerships.
Right, Smartfren is the smallest telco operator in the country, and until now it struggles with years of losses.
In the first half (H1) of 2023, FREN sales revenues inched up to Rp5.56 trillion, a distant fourth behind XL Axiata/EXCL (Rp15.76 trillion in the first half).
While EXCL enjoyed operating profit of Rp2.24 trillion to make OPM 14.2%, FREN booked operating profit of Rp143.6 billion only to make OPM 2.6%.
XL Axiata booked net profit Rp650.7 billion in H1 this year, while SmartFren recorded net loss of Rp543.2 billion against profit of Rp54.6 billion in the corresponding period last year.
FREN should have reported bigger losses if not recording non-cash forex gain of Rp410 billion in the period because the company also posted Rp389.9 billion loss on investment in shares.
The loss was related to falling value of Moratelindo (MORA), whose stock price fell sharply from Rp665 in August 2022 to Rp464.***
