Alibaba takes 6% stake in Smartfren

9 Aug 2022

China’s Alibaba Group has acquired 19.6 billion shares, equivalent to a 6% stake, in Indonesian operator PT Smart Telecom (Smartfren) for a cash consideration of IDR1.5 trillion (USD100.8 million). The transaction came after Smartfren shareholder PT Dian Swastika Sentosa (DSSA) – a unit of the Sinar Mas Group – released the shares. Upon completion, DSSA will continue to hold 52.98 billion Smartfren share, equivalent to a 17% ownership. In a disclosure to the Indonesia Stock Exchange, DSSA said that the purpose of the sale is for a ‘business collaboration’.

In December 2021 Alibaba and Smartfren established a joint venture between its subsidiary SF Digital Commerce and Fonixtree Digital Singapore (FDSL) – an affiliate of Whale Cloud Technology, part of Alibaba’s cloud software services ecosystem. More recently, last month CommsUpdate reported that Alibaba was poised to plough around USD100 million into the Indonesian operator. Citing Deal Street Asia, it was noted that the investment marks a ‘deepening [of] its exposure in the Indonesian market by tapping one of the country’s biggest conglomerates and its vast ecosystem spanning communications and technology’. The e-commerce giant is understood to be keen to develop its data centre business in Indonesia.

In Q1 2022 Smartfren reported operating income of IDR2.68 trillion, up 11.3% from IDR2.41 trillion in the corresponding period of 2021, as operating profit improved to IDR136.55 billion from a loss of IDR80.41 billion, and pre-tax losses narrowed to IDR95.74 billion from IDR495.75 billion. As a result of the above, Smartfren logged a net profit of IDR98.92 billion in January-March 2022, compared to a loss of IDR396.83 billion in Q1 2021.

Indonesia, Alibaba Group, Smart Telecom (Smartfren)