October 28 2025 | Deals | Mergers and acquisitions | Technology | Innovation
Indonesian dealmakers breathed a sigh of relief after the $US6.5 billion merger between XL Axiata, Smartfren Telecom and its subsidiary SmartTel completed in March 2025, subsequent to government approval. The deal will change the competitive landscape across the nation’s telco sector and could prompt a flurry of smaller deals.
In common with other countries in the ASEAN region, Indonesia has been striving to develop a robust digital economy. The country boasts more than 214 million mobile phone users while internet penetration reached 79.50 % in 2024 , up from 24.23 % a decade earlier. That’s enabled a wave of economic activity across the ecommerce, fintech and digital start-up sectors. However, disparities in digital access remain prevalent in regions outside Java.
With the scale and financial strength to drive investment, the combined entity, XL Smart, is well placed to address the archipelago’s unique infrastructure challenges. Enhancing service quality, improving network capabilities and driving innovation in AI and 5G is expected to generate further opportunities and growth in the digital sphere.
Deal market subdues
Off the back of a busy 2024, activity has slowed significantly in the Indonesian market, which has recorded 74 deals worth $3.3 billion in the calendar year to date. The numbers stand in stark contrast to those recorded in the same period last year: 107 deals worth $8.4 billion from 1 January to 30 September.
Once again, energy and natural resources have dominated the flow. This year, the sector accounts for 14 deals valued at $1.3 billion. Small scale industrials transactions have kept buyers and sellers occupied at the bottom end of the market, with nine deals valued at $883 million.
Regulatory hurdles stymy digital consolidation
Meanwhile, a long mooted mega-deal involving one of Indonesia’s most successful digital enterprises and a regional rival has yet to progress, with competition concerns understood to remain a significant barrier . Singapore’s Grab Holdings is a NASDAQ-listed behemoth that offers ride hailing, food and grocery delivery and financial services, including digital payments, lending and insurance.
It has a presence in eight southeast Asian countries, including Indonesia, where its chief competitor is the homegrown GoTo Group, a fellow ‘unicorn’ with a similar business model and the country’s largest digital eco-system. Investors in the latter include Softbank and Taobao. Persistent reports of a takeover by Grab have given rise to concerns about the potentially negative impact of excess concentration, given the two players together have an estimated market share exceeding 90%.
Both Singapore and Indonesia have competition and consumer laws which prohibit the formation of potential monopolies which could limit consumer choice and enable the introduction of predatory pricing. Should talks advance further, they’re likely to be invoked, by decision makers with an interest in seeing an environment of open and unfettered competition maintained.
As Indonesian continues to progress towards its goal of achieving developed economy status by 2045, further opportunities for local and international investors are likely to emerge across the infrastructure, industrials, digital economy and FMCG sectors.
