Ooredoo and CK Hutchison sign $ 6 billion Indonesian merger

11m | Nathalie Bannerman

Ooredoo QSC (Ooredoo) and CK Hutchison Holdings Limited (CK Hutchison) have signed a definitive $ 6 billion agreement to merge their telecoms activities in Indonesia.

PT Indosat Tbk (Indosat Ooredoo) owned by Ooredoo and PT Hutchison 3 Indonesia (H3I) owned by CK Hutchinson will be merged into a new company to be called PT Indosat Ooredoo Hutchison Tbk (Indosat Ooredoo Hutchison).

When completed, the merger will bring together two complementary companies to create a larger, commercially stronger and more competitive digital telecommunications and internet company. In addition, as the second largest mobile telecommunications company in the country, Indosat Ooredoo Hutchison is expected to achieve annual revenue of around $ 3 billion.

At the same time, Indosat Ooredoo and H3I both have complementary infrastructure, the combination of which will also allow the merged company to benefit from cost and investment synergies and deliver accretive returns to all stakeholders. Annual pre-tax synergies of approximately $ 300 to $ 400 million are expected over 3 to 5 years.

“With this agreement in place, we can now focus on closing the transaction and then work closely with CK Hutchison to leverage the combined expertise of our respective global telecommunications groups to create a digital telecommunications company. world class for Indonesia, ”said Aziz Aluthman. Fakhroo (photo on the left), managing director of the Ooredoo group.

“Thanks to economies of scale and the realization of synergies between these highly complementary activities, the merged company will be well placed to deliver a higher return on investment to all shareholders and build on the exceptional growth momentum already achieved. by Indosat Ooredoo. will build a company with the strength and scale to accelerate Indonesia’s digital transformation and improve network performance and customer experience across the country. “

“Finally, I would like to express our most sincere gratitude to the Indonesian government for its progressive policies which enable this consolidation and the creation of a more sustainable telecommunications industry, which will benefit customers, all operators, local shareholders and the population. from Indonesia, ”Fakhroo added.

Ooredoo Group currently owns a 65% stake in Indosat Ooredoo through Ooredoo Asia, its 100% owned holding company. Through the merger, CK Hutchison will acquire a 21.8% stake in Indosat Ooredoo and PT Tiga Telekomunikasi Indonesia, representing 10.8% of the merged business of Indosat Ooredoo Hutchison.

In addition, CK Hutchison will acquire a 50% stake in Ooredoo Asia by exchanging its 21.8% shares in Indosat Ooredoo Hutchison for a 33.3% stake in Ooredoo Asia and acquire an additional 16.7% stake in Ooredoo Group for $ 387 million in cash. Upon completion of these transactions, the two parties will each own 50.0% of Ooredoo Asia, which will be renamed Ooredoo Hutchison Asia, which will hold a controlling 65.6% stake in the merged company.

At 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 Indonesian government retaining its 9.6% stake, PT Tiga Telekomunikasi Indonesia holding a 10.8% stake, while other public shareholders hold around 14%.

“With a larger scale, a broader spectrum and a more efficient cost structure, Indosat Ooredoo Hutchison will also be in a better position to expand its network deployment and improve the quality and speed of service. CK Hutchison invests in and operates telecommunications companies in 12 markets around the world, many of which have successfully deployed 5G networks, and we look forward to expanding innovative 5G services in Indonesia when the time comes, ”said Canning Fok (pictured right), Co-Managing Director of CK Hutchison Holdings Group.

Finally, I would also like to express my gratitude to the Indonesian government. His foresight in creating a policy environment conducive to investment helps create a strong and sustainable mobile market in Indonesia.

Subject to the approval of Indosat Ooredoo shareholders, the two companies have appointed Vikram Sinha as CEO and Nicky Lee as CFO of the new merged company. Until then, Ahmad Al-Neama will remain CEO and CEO of Indosat Ooredoo and Cliff Woo will be CEO of H3I. Upon completion and subject to approvals, Al-Neama and Woo will join the board of trustees of the merged company.

Subject to regulatory approvals and conditions, the transaction is expected to close by the end of 2021.