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)PT Hutchison 3 Indonesia plans to acquire one of three mobile operators in Indonesia. The company has held talks with the three operators, management said as quoted by local media on Monday (9/23). It said the operators that eyed by Hutchison are the listed companies, such as PT XL Axiata Tbk (IDX: EXCL), PT Indosat Tbk (IDX: ISAT) and PT Smartfren Tbk (IDX: FREN).

The company’s deputy director Danny Buldansyah revealed, so far the company has not been able to determine which of the three companies will be collaborated with. However, he went on, the company was open to the possibility of acquisitions and mergers.

For that, Buldansyah claimed it had prepared funds that were taken from injection from shareholders amounting to Rp47 trillion (US$3.35 billion).

Meanwhile, Hong Kong’ CK Hutchison Holdings Ltd. (Hutch) approached Malaysia’ Axiata Group Berhard on the potential merger of their Indonesian units, Hutchison 3 Indonesia with XL Axiata. Recently, the Indonesian government urged the country’ telco operator to consolidate their businesses for its future business.

The discussion was set up after Axiata had ended 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 months ago, 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.

On 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 ($472 million), or 86 percent of Hutch Asia’ total revenue in the first six months of 2019.

In Indonesia, Hutch operates Hutchison 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 Ltd. joined with Etisalat Lanka 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 supports the move of the telco players in Indonesia consolidating their businesses.

Recently, the 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 Smartfren Telecom 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 Indosat, XL Axiata and Smartfren.

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 it is still the authority of shareholders. Rudiantara revealed said that there were too many telecommunication 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=Rp14,200

Written by Staff Editor, Email: lexy@theinsiderstories.com