Ooredoo and CK Hutchison agree US$6 billion Indonesian merger

Ooredoo and CK Hutchison agree US$6 billion merger of Indonesian units

Ooredoo and CK Hutchison have agreed to merge their Indonesian units to create a new entity branded as PT Indosat Ooredoo Hutchison.

Comprised of Indosat Ooredoo and Hutchison 3 Indonesia, the merged company will be a commercially stronger and more competitive world-class 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.

Combining the complementary assets and products of Indosat Ooredoo and H3I will drive innovation and network improvements that will enable the delivery of digital services, as well as a broader product offering, to customers across Indonesia.

Indosat Ooredoo and H3I own complementary infrastructure and the combination of these assets will enable the merged company to benefit from cost and CAPEX synergies and provide accretive returns to all stakeholders.

Ooredoo Group currently has a controlling 65.0% shareholding 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.

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 signatories will each own 50.0% of Ooredoo Asia, to be renamed Ooredoo Hutchison Asia, which will retain a controlling 65.6% ownership stake in the merged company. 

Upon closing of the transactions, Indosat Ooredoo Hutchison will be jointly controlled by Ooredoo Group and CK Hutchison. It will remain listed on the Indonesian Stock Exchange, with the Government of Indonesia retaining a 9.6% shareholding, PT Tiga Telekomunikasi Indonesia holding a 10.8% shareholding, and other public shareholders holding approximately 14.0%. 

While shareholder approvals are required, the companies have nominated 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

Canning Fok, Group Co-Managing Director of CK Hutchison Holdings Limited, said: “Indosat Ooredoo Hutchison will have a critical mass that will enable it to drive network expansion and improvements that will support the Government’s digital agenda and benefit customers and Indonesia as a whole. 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.”

Completion of the transaction will be subject to the approval of Ooredoo Group, CK Hutchison, Indosat Ooredoo shareholders, regulatory approvals and other customary terms and conditions. Assuming all approvals are received, the merger is expected to close by the end of 2021.

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