CK Hutchison and Ooredoo Group agree to merge Indonesian telco biz

Hong Kong conglomerate CK Hutchison Holdings has inked a deal with telco Ooredoo to merge their respective telecommunications businesses in Indonesia with management appointments.  After the merger, the respective telecommunications businesses of Ooredoo, Indosat Ooredoo, and CK Hutchison Holdings' H3I, will be named Indosat Ooredoo Hutchison. It will be the second largest mobile telecoms company in the country, with an estimated annual revenue of approximately US$3 billion, according to CK Hutchison Holdings, adding that the combined company will have the scale, financial strength, and expertise to compete more effectively.

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.

In addition, Indosat Ooredoo Hutchison will be able to leverage the experience and expertise of Ooredoo Group and CK Hutchison in networks, technologies, products and services, and benefit from their multinational operations spanning major markets in Europe, the Middle East, North Africa, and Asia Pacific. The merged company will also benefit from their combined strength and economies of scale in functions such as procurement.

Currently, Ooredoo Group has a controlling 65% shareholding in Indosat Ooredoo through Ooredoo Asia. The merger of Indosat and H3I will result in CK Hutchison receiving newly issued shares in Indosat Ooredoo amounting to 21.8% and PT 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% shareholdings 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 US$387 million. Following the above transactions, the parties will each own 50% of Ooredoo Asia, to be renamed Ooredoo Hutchison Asia, which will retain a controlling 65.6% ownership stake in the merged company.

“This merged company will deliver significant value and benefits for all stakeholders including Indosat Ooredoo and Ooredoo Group shareholders, for customers, employees and Indonesia. Importantly, the merger will create a company with the strength and scale to accelerate Indonesia’s digital transformation and improve network performance and customer experience across the country," said Aziz Aluthman Fakhroo, managing director of Ooredoo Group. 

Meanwhile, Ooredoo and CK Hutchison Holdings have agreed to nominate Vikram Sinha as CEO and Nicky Lee as CFO of Indosat Ooredoo Hutchison. Ahmad Al-Neama will remain President Director and CEO of Indosat Ooredoo and Cliff Woo will remain as CEO of H3I until completion of the merger. Upon completion, Ahmad Al-Neama and Cliff Woo will join the Board of Commissioners of the merged company, subject to the necessary Indosat Ooredoo approvals.

“With greater scale, expanded spectrum, and a more efficient cost structure, Indosat Ooredoo Hutchison will also be better positioned to extend the rollout of its network and enhance service quality and speed. CK Hutchison invests in and operates telecom businesses in 12 markets around the world, many of which have successfully rolled out 5G networks, and we look forward to expanding innovative 5G services in Indonesia when the time is right," said Canning Fok, group co-managing director of CK Hutchison Holdings. 
 
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