Suggested headline: CK Hutchison, Ooredoo Group to merge Indonesian operations
In a $6 billion deal, Ooredoo and CK Hutchison have decided to merge their operations in Indonesia to create the country’s second-largest service provider, PT Indosat Ooredoo Hutchison.
The merged entity will bring together the complementary businesses of the two companies. Further, with the backing of two major telecoms groups, the merged company will have the scale, financial strength and expertise, thus creating a more competitive digital telecoms and internet company.
"It will be the second largest mobile telecoms company in the country, with an estimated annual revenue of approximately US$3 billion," says the press release issued by Ooredoo.
The complementary infrastructure will help the merged entity to gain from cost and CAPEX synergies. As a result, annual savings from the merger are likely to be around $300-400 million over the next three to five years. PT Indosat Ooredoo Hutchison will also benefit from the global operations of its parent companies.
Ooredoo Group owns a 65.0% stake in Indosat Ooredoo through Ooredoo Asia, a wholly-owned holding company. "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," says the press release issued by Ooredoo Group.
At the same time, CK Hutchison will acquire 50% shareholding in Ooredoo Asia by exchanging 21.8% shareholding in Indosat Ooredoo Hutchison for a 33.3% stake in Ooredoo Asia. It will also acquire additional 16.7% stake from Ooredoo Group for cash transaction of $387 million. This will ensure that both Hutchison and Ooredoo Group own 50% each of Ooredoo Asia, which will be renamed as Ooredoo Hutchison Asia.
"Through economies of scale and the realization of synergies between these highly complementary businesses, the merged company will be well placed to deliver a higher return on investment for all shareholders and build on the outstanding growth momentum already achieved by Indosat Ooredoo," says Aziz Aluthman Fakhroo, Managing Director of Ooredoo Group.
Indosat Ooredoo are shortlisted in several categories for the 2021 World Communication Awards. DOWNLOAD the official shortlist here