XL Axiata Axis Acquisition

Financial Management
 Company background
With the monetary crisis, irrational operators
disrupted market share, so XL decided to
acquire AXIS to maintain its market share.
 A general description of the
company
• Sejarah
PT XL Axiata • Perkembangan
Tbk
• Sejarah
PT AXIS Telekom • Perkembangan
Indonesia
 History of PT XL Axiata
The company has been listed on the Indonesia Stock Exchange
since September 2005. XL offers a variety of telecommunications
products and services such as Conversations, SMS, Data-based
services and other additional services to more than 90% of
Indonesia's population of 240 million people. XL started its
commercial activities in 1996, XL is currently one of the largest and
highest providers of cellular telecommunications services for growth
in the telecommunications industry by serving 31.4 million
customers from various countries.
Development of PT XL Axiata
The XL network uses GSM 900 / DCS 1800 and IMT-
2000 / 3G technologies. XL also has several licenses,
including closed regular networks (leased lines), internet
service providers (ISPs), Voice over Internet Protocol
(VoIP), and Internet interconnection services (NAP). XL
has even obtained a license for e-Money (electronic
money) from Bank Indonesia, which allows XL to provide
money transfer services.
 History of PT Axis Telekom
Indonesia
PT. Natrindo Telepon Seluler was originally part of the Lippo Group.
Natrindo is the first GSM 1,800 MHz cellular telecommunications
operator in Indonesia. On June 7, 2011, based on the approval of
the Ministry of Law and Human Rights, the name of the legal entity
of the company AXIS was changed from PT. Natrindo Telepon
Seluler becomes PT. AXIS Telekom Indonesia.
 Development of PT Axis
Telekom Indonesia
Entering its fourth year of operation AXIS has provided funds of
more than USD 1.2 billion to expand its network and infrastructure,
expand the area of mobile broadband services, and implement
HSPA + technology for the next three years. At present AXIS has
reached more than 80% of the population and is available in more
than 400 major cities in Indonesia.
Implementation of Strategic Management at
PT. XL Axiata Tbk
• Compilation and development of a collection of
corporate governance books in books, general
information and information and applicable
regulations.
• Started the preparation of Corporate
Governance which contains steps from the
previous book by developing internal and main
guidelines for XL's operational activities
 The purpose of the acquiring
company
The 1,800 MHz frequency itself is the future source of data services
using 4G technology. The company (XL Axiata) only has 7.5 MHz on
that frequency, therefore XL Axiata must obtain an additional 1,800
MHz frequency by acquiring Axis this strategic step to get the
frequency.
 Impact of acquisition for the
company
• There is an increase in Current Ratio,
Quick Ratio, Cash Ratio.
• And an increase in Debt To Asset Ratio,
Debt To Equity Ratio, Long Term Debt To
Equity Ratio.
• Decrease in return on assets, return of
equity, return of investment.
Changes in performance
before and after acquiring
• a decline in profitability ratios
caused by losses.
• the size of the company's costs
the company's performance on
long-term debt and profit turnover
has decreased.
• The comparison can be said to be
good because of an increase in
the liquidity ratio but the condition
of the company is still not declared
liquid because it is still below the
industry standard average.
• solvency ratio can be said to be
bad because of an increase after
acquisition
 Conclusion
The XL company chose to make a horizontal acquisition of
Axis to increase market share and defeat competitors in
this era of rapid technological development. PT.XL
Axiata.tbk expects to be able to create a more integrated
telecommunications company. After a profit comparison
and financial performance of PT. XL Axiata.tbk, the
conditions were quite bad because the level of profitability
decreased and solvency increased after the acquisition.
But the comparison of financial ratios is still good because
there is an increase in liquidity. It can be concluded that the
company has not been effective enough to increase profits
and company performance.
 Suggestion
For companies that are going to make an acquisition, they
should make a good preparation such as seeing the
condition and performance of the company first. Based on
this paper there are poor results so it is suggested that the
company make future estimates in terms of profits and
financial performance so that the company does not get a
loss in the coming year. And also the company can make a
better strategy by attracting investors to increase the
company's capital so that the company experiences good
financial conditions for marketing and selling its products.