CK Hutch, Ooredoo Near Deal for Indonesia Mobile Merger

(Bloomberg) -- Hong Kong’s CK Hutchison Holdings Ltd. is nearing a deal with Qatar’s Ooredoo QPSC about a combination of their telecommunications operations in Southeast Asia’s most populous country, according to people with knowledge of the matter.

CK Hutch is in advanced talks to merge its Indonesian telecom business with Ooredoo’s PT Indosat, the people said. Ooredoo owns about 65% of Jakarta-listed Indosat. A deal would involve a cash-and-stock offer, said the people, who asked not to be identified as the discussions are private. Both companies are set to become significant shareholders in the combined entity, the people said.

An announcement could come as soon as this week, the people said. The exact structure of any potential deal in Indonesia hasn’t been finalized, while negotiations could still be delayed or even fall apart, the people said.

Representatives for CK Hutch and Ooredoo didn’t immediately respond to requests for comment.

Shares of Indosat have risen about 90% this year, giving the company a market valuation of around $2.2 billion. The Indonesian wireless business accounted for about 23% of Ooredoo’s total earnings before interest, tax, depreciation and amortization in 2019, making it the second-largest for the group after its home market, according to its latest annual report. It counted about 60.4 million customers as of the end of September.

Hutchison Asia Telecommunications, which houses CK Hutch’s telecom business in Indonesia, Vietnam and Sri Lanka, had about 48.8 million active customer accounts across the three countries, according to its latest interim financial report. Indonesia accounted for HK$3.95 billion ($510 million), or 87% of Hutch Asia’s total revenue in the first six months of 2020. It’s the only Hutch Asia market that posted a positive Ebitda.

CK Hutch last year made preliminary approach to Axiata Group Bhd. about a potential merger of their Indonesian telecom operations, Bloomberg News has reported. The Hong Kong conglomerate backed by tycoon Victor Li informally expressed interest in exploring a combination of its own local wireless business with PT XL Axiata, people familiar with the matter said at that time.

State-owned PT Telekomunikasi Indonesia is the country’s largest wireless operator with 171 million customers as of 2019. Telkomsel, XL and Indosat collectively captured 86% of mobile revenue in Indonesia in the first-half of 2020, according to a report by Fitch Ratings in November.

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