Ooredoo Group and CK Hutchison closed a long-discussed deal to merge their Indonesian units with a transaction value of about $6 billion, creating the second-largest operator in the country with nearly 104 million subscribers.
The tie-up between Indosat Ooredoo and Hutchison 3 Indonesia (H3I) will be named PT Indosat Ooredoo Hutchison and remain listed on the Indonesian Stock Exchange. The companies stated they expect annual revenue of about $3 billion and are targeting cost reductions of $300 million to $400 million a year over three-to-five years.
Ooredoo Group, CK Hutchison and Indosat Ooredoo shareholders, and regulatory bodies must approve the deal. It is expected to be completed by the end of 2021.
The two companies reportedly began discussing combining the units in December 2020.
They stated the combined business will “be well positioned to accelerate Indonesia’s economic growth and transformation into a digital society”.
GSMA Intelligence data showed Indosat Ooredoo had 59.5 million subscribers at end-June, H3I 44.1 million, XL Axiata 55.4 million and Telkomsel 169 million.
New leadership
Ooredoo Group MD Aziz Aluthman Fakhroo explained with a deal 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”.
Vikram Sinha, director and COO of Indosat Ooredoo is in line to be CEO of the merged business and Nicky Lee, finance head for Asian telecoms at CK Hutchison will become CFO.
Indosat Oordeoo president director and CEO Ahmad Al-Neama and H3I CEO Cliff Woo will join the board.
Each of the parent companies will take a 50 per cent share in Ooredoo Asia, a wholly-owned holding company which will be renamed Ooredoo Hutchison Asia and retain a 65.6 per cent ownership in the merged company.
CK Hutchison will exchange its 21.8 per cent stake in Indosat Ooredoo Hutchison for a 33.3 per cent stake in Ooredoo Asia and will acquire an additional 16.7 per cent share from Ooredoo Group for $387 million.
The Indonesian government will own a 9.6 per cent take in the merged company, maintaining the same share as it has in Indosat Ooredoo.
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