By Yantoultra Ngui and Stefanno Sulaiman

SINGAPORE/JAKARTA, Dec 11 (Reuters) - Indonesian telcos

XL Axiata, Smartfren Telecom and Smart

Telcom (SmartTel), a unit of Smartfren, said on Wednesday they

have agreed to merge to create a combined entity with an

enterprise value of 104 trillion rupiah ($6.5 billion).

Reuters first reported on the merger with financial details

earlier on Wednesday.

The companies said in a joint statement the merged entity

will be called XLSmart Telecom Sejahtera and "will have the

scale, financial strength and expertise to drive investments in

digital infrastructure, expand service coverage", and other

areas.

"This merger is an important step in laying the

foundation for a robust digital economy," said Vivek Sood, Group

CEO of Axiata Group, parent of XL Axiata.

XLSmart will have a combined mobile subscriber base of

around 94.5 million and a market share of 27% in Indonesia, with

pro-forma revenues of 45.4 trillion rupiah and earnings before

interest, tax, depreciation and amortisation (EBITDA) of over

22.4 trillion rupiah, the statement said.

The proposed merger comes as telecom players in Asia

consolidate to increase their scale and resources to invest and

adapt to the rising demand for digitalisation and connectivity

amid a boom in 5G and artificial intelligence.

"We know that the telecommunications industry is

increasingly saturated, the room for growth is also getting

smaller, so I think the merger is inevitable," Nezar Patria,

deputy communication and digital minister said on Wednesday,

according to state news agency Antara.

The companies estimate the merger will result in pre-tax

synergies of $300 million to $400 million, through strategic

network integration and resource optimisation.

The merger is expected to complete in the first half of

2025 subject to regulatory and shareholder approvals, the

statement showed.

Malaysia-listed Axiata Group and Smartfren's parent,

Sinar Mas Group, will become joint controlling shareholders,

each holding a 34.8% stake in XLSmart, with equal influence over

its strategic direction and decisions, the companies said.

The shareholding equalisation will result in Axiata

receiving up to $475 million cash, according to the statement.

CIMB and J.P. Morgan are financial

advisers to Sinar Mas' entities. Deutsche Bank and

Maybank are financial advisers to Axiata. Citibank

acts for XL Axiata, the statement said.

($1 = 15,860.0000 rupiah)