Ooredoo and CK Hutchison agree USD6bn Indonesian mobile merger

17 Sep 2021

Qatar-based Ooredoo and CK Hutchison Holdings of Hong Kong announced yesterday (16 September) the signing of definitive transaction agreements for the proposed merger of their respective telecommunications businesses in Indonesia, Indosat Ooredoo and Hutchison 3 Indonesia (Tri), to create an enlarged entity named Indosat Ooredoo Hutchison. The new combined telco will become the archipelago’s second largest mobile network operator behind Telkomsel (Telekomunikasi Selular), with estimated annual revenue of approximately USD3 billion. Further, the combination is expected to result in annual savings of between USD300 million and USD400 million, realised over the next three to five years.

The Qatari group currently has a controlling 65.0% shareholding in Indosat Ooredoo through its wholly owned Ooredoo Asia unit. The pair noted that the merger of Indosat and Tri will result in CK Hutchison receiving newly issued shares in Indosat Ooredoo amounting to 21.8% and Tiga Telekomunikasi Indonesia amounting to 10.8% of the merged Indosat Ooredoo Hutchison business. Concurrent with the merger, CK Hutchison will acquire a 50% shareholding in Ooredoo Asia by exchanging its 21.8% shareholding in Indosat Ooredoo Hutchison for a 33.3% stake in Ooredoo Asia, and will acquire an additional 16.7% stake from Ooredoo Group for a cash consideration of USD387 million.

Following the above transactions, the parties will each own 50.0% of Ooredoo Asia, to be renamed Ooredoo Hutchison Asia, which will retain a controlling 65.6% ownership stake in the merged company – Indosat Ooredoo Hutchison. It will remain listed on the Indonesian Stock Exchange, with the government of Indonesia retaining a 9.6% shareholding, Tiga Telekomunikasi Indonesia holding a 10.8% shareholding, and other public shareholders holding approximately 14.0%.

The deal will need to be approved by Ooredoo Group, CK Hutchison and Indosat Ooredoo shareholders, and is expected to be closed by the end of 2021. Current Indosat Ooredoo COO Vikram Sinha will become CEO, with the current CEOs of Indosat Ooredoo and Tri joining a board of commissioners for the merged company.

Commenting on the merger, Aziz Aluthman Fakhroo, Managing Director of Ooredoo Group, said: ‘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.’

Indonesia, CK Hutchison, Hutchison 3 Indonesia (Tri), Indosat Ooredoo (incl. IM2), Ooredoo Group