Ooredoo and CK Hutchison Agree to Merger in Indonesia

Fakhro: Providing outstanding value to our customers and shareholders

Fuk: Expand the network’s reach and enhance the quality and speed of services

Ooredoo and CK Hutchison Holdings Limited (CK Hutchison) announced the signing of a merger agreement for their respective telecom companies in Indonesia, PT Indosat Tbk (Indosat Ooredoo) and PT Hutchison 3 Indonesia (H3I), in a mega deal worth 6 Billions of dollars, and the new combined company will be called PT Indosat ooredoo Hutchison Tbk (“Indosat ooredoo” Hutchison).

The merger of Indosat Ooredoo and H3I will bring together two complementary companies to create a new world-class digital telecommunications and Internet company that is larger, commercially stronger, more competitive and has the potential to deliver greater value to all shareholders and customers as well as to Indonesia.
Ooredoo Hutchison Indosat is helping to accelerate economic growth and digital transformation in Indonesia, and will be the second largest mobile operator in the country, with annual revenues of approximately $3 billion.

Merge complete
Aziz Al Othman Fakhro, Managing Director of Ooredoo Group, said: “This agreement is an important step towards our shared vision of delivering outstanding value to our customers and shareholders by bringing together two leading telecom brands to create a second stronger telecom company in Indonesia, with the support of Two highly committed partners of the Ooredoo Group and CK Hutchison.
“With the conclusion of this agreement, we can now turn our attention toward completing the merger and then work closely with CK Hutchison to harness our combined expertise to build a world-class digital communications company for Indonesia.”
He emphasized that the combined company will provide significant value and benefits to all stakeholders including the shareholders of Indosat Ooredoo and the Ooredoo Group, as well as to customers, employees and Indonesia as a country.
He noted, “Through economies of scale and synergies between these integrated companies, the combined company will be well positioned to provide a higher return on investment for all shareholders and benefit from the outstanding growth momentum already achieved by Indosat Ooredoo. Most importantly, the merger will create a company with all the ingredients needed to accelerate Indonesia’s digital transformation and enhance network performance and customer experience across the country.
“I would like to express our sincere gratitude and thanks to the Government of Indonesia for its progressive policies that facilitate this integration process and enable the creation of a more sustainable telecom sector, which will benefit all operators and local shareholders and the people of Indonesia.”

digital transformation
Canning Fook, Co-General Manager of CK Hutchison Holdings, said: “This merger is a fantastic opportunity to create a stronger and more innovative telecom company in Indonesia and this transaction will generate cumulative profitability for shareholders and other stakeholders alike.
He added, “Ooredoo Hutchison Indosat will have all the critical elements that will enable it to develop the network and make the necessary improvements to support the government’s digital agenda, benefiting customers and Indonesia as a whole.”
He said: “Ooredoo Hutchison Indosat – with its larger size, wider bandwidth and more efficient cost structure – will be in a very ideal position to expand the reach of its network and enhance the quality and speed of service.” CK Hutchison invests and operates in telecommunications in 12 markets around the world, many of which have successfully deployed 5G networks, and we look forward to expanding innovative 5G services in Indonesia in due course.”
He added, “I would like to thank the Ooredoo Group for their commitment throughout this process, we have had fruitful discussions on how to build a strong joint business over the past few months and look forward to building an ongoing and successful partnership together.”
I express my gratitude to the Government of Indonesia for providing a favorable investment environment that helps build a strong and sustainable mobile market in Indonesia.”

milestone
Sheikh Faisal Bin Thani Al Thani, Chairman of the Ooredoo Group, said: “This merger is a milestone for the telecom sector in Asia as well as for us in the Ooredoo Group. It will undoubtedly advance our strategy of creating greater value through our services and contribute to accelerating the digital transformation of our workplaces around the world. I look forward to a long and successful partnership with CK Hutchison and working together to build Indosat Ooredoo Hutchison into a major digital company in Indonesia.”
The incorporated company has the necessary components of size, financial strength and experience to qualify it to compete more in the market. The combination of complementary assets and products for Indosat Ooredoo and H3I will drive innovation and network upgrade, which in turn will provide more diverse and broader premium digital services to customers across Indonesia.
Indosat Ooredoo and H3I have a highly integrated infrastructure and the combination of these assets will enable the combined company to benefit from cost and capital expenditure synergies and provide cumulative returns to customers and all stakeholders.
It is expected that the merger will achieve annual financial savings in pre-tax operating costs, equivalent to $300-400 million, over a period of 3-5 years.
In addition to the above, the new combined company, Ooredoo Hutchison (Indosat) will be able to benefit from the expertise of the Ooredoo Group and CK Hutchison in networks, technologies, products and services, and to benefit from its operations in various countries covering key markets in Europe, the Middle East, North Africa and Asia Pacific. Combined also brings together strong advantages for both companies and economies of scale in functions such as procurement.

indonesian mobile services market
After the merger, the Indonesian mobile services market is expected to maintain a healthy level of competition, which will encourage long-term investment in the sector.
The Ooredoo Group currently owns 65.0% of the controlling interest in Indosat Ooredoo through Ooredoo Asia, a wholly owned holding company. The merger of Indosat and H3I will result in CK Hutchison acquiring 21.8% of newly issued shares in Indosat ooredoo and PT Tiga Telekomunikasi Indonesia acquiring 10.8% of the combined Indosat ooredoo Hutchison business.
In conjunction with the merger, CK Hutchison will acquire 50% of the shares in Ooredoo Asia by replacing its 21.8% stake in Indosat Ooredoo Hutchison with a 33.3% stake in Ooredoo Asia, and will acquire an additional 16.7% stake in the Ooredoo Group for a cash consideration of 387 million. American dollar. After the above transactions, each party will own 50.0% of the holding company, which will be renamed Ooredoo Hutchison Asia and retain a controlling interest of 65.6% in the combined company.
With the closing of the transaction, Ooredoo Hutchison Indosat will be jointly managed by Ooredoo Group and CK Hutchison. The combined company will remain listed on the Indonesian stock market, with the Government of Indonesia holding 9.6% of the shares, PT Tiga Telekomunikasi Indonesia owning 10.8%, and the general shareholders holding approximately 14.0%.
The parties agreed to nominate Mr. Vikram Sinha for the position of Chief Executive Officer and Mr. Nikki Lee for the position of Chief Financial Officer, Indosat ooredoo Hutchison, subject to the necessary shareholder approvals.
Mr. Ahmed Al Neama will remain CEO of Indosat Ooredoo and Mr. Cliff Wu as CEO of H3I, until the completion of the merger. After completion of the merger, Mr. Ahmed Al-Nama and Mr. Cliff Wu will join the Board of Commissioners of the merged company after obtaining the necessary approvals from Indosat Ooredoo.
The parties are committed to making the interests of employees a priority during the merger process, while complying with applicable laws and in line with future business growth opportunities. The combined company is expected to provide distinct growth opportunities for employees as they are an important part of a larger, financially stronger, more competitive and innovative technology company.
Completion of the transaction will be subject to approval by the Ooredoo Group, CK Hutchison and the Indosat Ooredoo Shareholders, regulatory approvals and other usual terms and conditions. Assuming all approvals are obtained, the proposed merger is expected to be completed by the end of 2021.
JP Morgan is the financial advisor to the Ooredoo Group, Goldman Sachs & Co and HSBC is the joint financial advisor to CK Hutchison, and Barclays is the financial advisor to Indosat Ooredoo.