Hong Kong' CK Hutchison Holdings Ltd. (Hutch) approached Malaysia' Axiata Group Berhard on the potential merger of their Indonesian units - Photo by the Company

JAKARTA (TheInsiderStories) – Hong Kong’ CK Hutchison Holdings Ltd. (Hutch) approached Malaysia’ Axiata Group Berhard on the potential merger of their Indonesian units, PT Hutchison 3 Indonesia with PT XL Axiata Tbk (IDX: EXCL), media reported. Recently, Indonesian government urged the country’ telco operator to consolidate their businesses for its future business.

Previously, Axiata has end the discussions with Norway’ Telenor ASA regarding a non-cash combination of their telecom and infrastructure assets in Asia. President and Group CEO Tan Sri Jamaludin Ibrahim, said in the last four months, both parties have been working on due diligence and finalizing the transaction agreements but due to some complexities involved in the proposed transaction, the parties have mutually agreed to end the discussions.

After the deal, he said, Axiata  continues to be a growth story and remains one of the largest mobile operators in the region. He stated, “We continue to actively explore possible consolidation and portfolio optimization opportunities to extract synergies, maximize efficiency and fund future growth areas.”

Last July, the company owned by tycoon Victor Li, Hutchison Asia Telecommunications, has developed telecommunications business in Indonesia, Vietnam and Sri Lanka, pocketing around 45.7 million active customer accounts in all three countries. He reported, Indonesia has contributed HK$3.7 billion (US$472 million), or 86 percent of Hutch Asia’ total revenue in the first six months (1H) of 2019.

In Indonesia, Hutch operates 3 Indonesia. The unit grows as a digital lifestyle provider. In Vietnam the company run HAT operation since October 2016 and operates mobile services under the brand, Vietnamobile. While, in Sri  Lanka, Hutchison Telecommunications Lanka (Private) Ltd. joined with Etisalat Lanka (Private) Ltd run Hutch Sri Lanka with majority stake of 85 percent.

Minister of Communication and Information Rudiantara told TheInsiderStories so far he has not yet received information about the plan. But he support the move of the telco players in Indonesia consolidating their businesses.

Recently, Indonesian government is planning to consolidate telecommunication companies to only three players left. Currently, there are still five telecommunications industry players in the country.

President Director of PT Smartfren Telecom Tbk (IDX: FREN) Merza Fachys, has said President Joko Widodo saw a lot of pressure that is experienced by telecommunications companies because of technological changes. One such consolidation discourse is between PT Indosat Tbk (IDX: ISAT), XL Axiata and his company.

Therefore, he continued, the consolidation is the solution to solve this problem and industry players often discuss this matter. He stated: “The discussion of consolidation is getting faster, this is indeed the way to achieve efficiency in the telecommunications industry.”

Moreover, Fachys said, the government indeed expects that there will only be three industry players to make this industry healthy. President Director of EXCL Dian Siswarini commenting the discussions of consolidation kept continuing between operators, but is is still the authority of shareholders.

Rudiantara revealed said that there were too many telecommunications players in Indonesia. Therefore, he hoped there would be consolidation through acquisition or merger among players so only two to three players remained.

US$1: HK$7.84

by Linda Silaen, Email: linda.silaen@theinsiderstories.com