Qatar-based multinational telecommunications company, Ooredoo and Hong Kong-based multinational conglomerate, CK Hutchison Holdings have agreed to merge their Indonesian telecom units, PT Indosat and PT Hutchison 3 Indonesia (H3I), in a $6 billion deal.
The merged entity will be the second-largest mobile telecoms company in the country with annual revenue of about $3 billion and it will be named PT Indosat Ooredoo Hutchison.
The merger of Indosat Ooredoo and H3I will bring together two highly complementary businesses to create a larger, commercially stronger and more competitive world-class digital telecom and internet company, well placed to deliver more value for all shareholders and customers.
The deal will help the combined company to better compete against state-backed Telkomsel, which controls around half of the cellular market in the world’s fourth most populous country.
Indosat Ooredoo Hutchison will be well-positioned to accelerate Indonesia’s economic growth and transformation into a digital society. The combined company will have the scale, financial strength, and expertise to compete more effectively, Ooredoo stated.
Combining the highly complementary assets and products of Indosat Ooredoo and H3I will drive innovation and network improvements that will enable the delivery of outstanding digital services, as well as a broader product offering, to customers across Indonesia.
Following the merger, the Indonesian mobile market is expected to retain a healthy level of competition, attractive to long-term investment across the industry.
The merger of Indosat and H3I will result in CK Hutchison receiving newly issued shares in Indosat Ooredoo amounting to 21.8 percent and PT Tiga Telekomunikasi Indonesia amounting to 10.8 percent of the merged Indosat Ooredoo Hutchison business.
Upon closing, Indosat Ooredoo Hutchison will be jointly controlled by Ooredoo Group and CK Hutchison. It will remain listed on the Indonesian Stock Exchange, with the government retaining a 9.6 percent shareholding, PT Tiga Telekomunikasi Indonesia holding a 10.8 percent shareholding, and other public shareholders holding approximately 14 percent.
“This agreement is a significant step towards our shared vision of creating outstanding value for our customers and shareholders by bringing together two of Indonesia’s leading telecoms brands to create a stronger number two player in Indonesia, backed by two highly committed partners in Ooredoo Group and CK Hutchison. With this agreement in place, we can now turn our attention to closing the transaction and then working closely with CK Hutchison to leverage the combined expertise of our respective global telecoms groups to build a world-class digital telco for Indonesia.”
Group Co-Managing Director of CK Hutchison, Mr. Canning Fok said, “This is a great opportunity to create a stronger and more innovative telco player in Indonesia and will be an accretive transaction for shareholders and other stakeholders alike. Indosat Ooredoo Hutchison will have a critical mass that will enable it to drive network expansion and improvements that will support the Government’s digital agenda and benefits customers and Indonesia as a whole.”