FINANCIAL DUE DILIGENCE FOR MERGER AND ACQUISITION PT XL AXIATA TBK AND SMARTFREN TELECOM

• Main Author: Livain Ilhami, Muhammad
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/87164
• Institution: Institut Teknologi Bandung

This research examines the financial due diligence of the proposed merger between PT XL Axiata Tbk and PT Smartfren Telecom in Indonesia’s competitive telecommunications sector. The analysis evaluates the merger's feasibility, emphasizing financial performance, synergy potential, and risks. Utilizing the Discounted Cash Flow (DCF) methodology, the study highlights PT XL Axiata’s strong profitability and efficient operations, supported by stable cash flows and manageable debt levels. Conversely, PT Smartfren Telecom faces liquidity and solvency challenges, marked by high debt-to-equity ratios and volatile earnings. Despite these differences, the merger is projected to generate a synergy value of IDR 8,626 billion through operational efficiencies, cost savings, and revenue growth opportunities. Key benefits include economies of scale, enhanced resource allocation, and market expansion via bundled services and cross-selling strategies. However, Altman Z-Score analyses indicate financial distress risks, requiring careful financial management and restructuring for both firms. The study emphasizes the critical role of post-merger integration in achieving projected synergies, addressing challenges such as cultural alignment, workforce optimization, and regulatory compliance. Broader industry dynamics, including rapid technological advancements and evolving consumer demands, necessitate strategic investments in innovation, such as 5G deployment and customer experience enhancements. The findings provide actionable insights into value creation strategies while stressing the importance of risk mitigation and robust integration planning. This research offers a framework for assessing mergers in capital-intensive industries, balancing financial analysis with strategic foresight to ensure sustainable growth and stakeholder value.