Ooredoo, Hutchison deal creates $3bn MNO for Indonesia

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Ooredoo group and CK Hutchison have completed the merger of Indosat Ooredoo and H3I, after receiving all required shareholder and regulatory approvals.

Trading as Indosat Ooredoo Hutchison, the deal has created a new, major MNO for the Indonesian market, described by the two as the country's second largest mobile operator with an estimated annual revenue of approximately US$3 billion.

Vikram Sinha, who has held the position of COO of Indosat Ooredoo since 2019, has been appointed CEO.

Aziz Aluthman Fakhroo, MD of Ooredoo Group, said: “Indosat Ooredoo Hutchison is well placed to achieve exciting long-term growth under the leadership of Vikram and his experienced management team with a proven track record in Indonesia.

“The merger’s timely completion reflects the recognition of the significant value and benefits that the company will deliver for all stakeholders including Indosat Ooredoo and Ooredoo Group shareholders, customers, employees, partners and Indonesia. This landmark transaction is closely aligned with the progression of Ooredoo Group’s accelerated growth strategy."

Ooredoo Group and CK Hutchison added that the merger realises "significant operational synergies that will deliver cost efficiencies and facilitate deeper innovation and network enhancements, including the rollout of 5G in Indonesia".

According to insight published by Research And Markets in November, 5G will account for 37.5% of all mobile connections in Indonesia by 2026, with 4G tipped to secure a 56.6% market share and mobile market growth driven by expanded coverage, greater affordability, service improvements, increased data usage and smartphone penetration.

An earlier study, published by AT Kearney and covering the ASEAN region, stated that even without such synergies 5G could bring annual unconstrained additional revenue potential of $4.5 billion to $6 billion, or 9%-12% of current telecom revenues for operators by 2025. Further, they could add 6%-9% ($2.5 billion to $3.5 billion) to consumer revenues and 18%-22% ($1.5 billion to $2.5 billion) to enterprise revenues.

Canning Fok, group co-managing director of CK Hutchison Holdings, praised the Indonesian government for "creating a policy environment that has encouraged deals like this one to take place", and added that such moved will strengthen the local mobile market at a critical time for digitalisation.  

He added: “I have every confidence that this merger will be highly accretive for all stakeholders involved, including customers, shareholders, and for Indonesia. Indosat Ooredoo Hutchison is now a stronger, world-class digital telecoms and internet company with critical mass, well positioned to build an even more powerful network that can benefit Indonesia’s development and customers, who will receive improved services and an even broader product offering that would not have otherwise been possible.

“Now the number two operator in Indonesia, the merged company can harness its combined resources to drive the further roll out its network to enhance quality and speed and invest in 5G technology. We have faith in the strength and performance of the business and the strong growth prospects that Indonesia’s market presents," Fok continued.

Indosat Ooredoo Hutchison will be jointly controlled by Ooredoo Group and CK Hutchison with a 65.6% shareholding.  It will remain listed on the Indonesian Stock Exchange under the ticker ORDS, 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%.