Ooredoo Indonesia and Hutchison 3 agree $6 bn merger

Ooredoo and CK Hutchison announced their decision to combine Indonesia operators Indosat and Hutchison 3 in a $6 billion merger deal.
Hutchison 3 Indonesia and Nokia
The merged company named Indosat Ooredoo Hutchison will be the second largest mobile telecoms company in the country, with an estimated annual revenue of approximately $3 billion.

Annual run rate pre-tax synergies of approximately $300-400 million are expected to be realized over 3-5 years.

Indonesia’s mobile services revenue will grow at a compound average growth rate (CAGR) of 1 percent from $10.1 billion in 2020 to $10.5 billion in 2025 due to decline in mobile voice revenues, says GlobalData.

Ooredoo currently has 65 percent stake in Indosat Ooredoo through Ooredoo Asia, a wholly-owned holding company.

The merger of Indosat and H3I will result in CK Hutchison receiving 21.8 percent equity stake in Indosat Ooredoo and Tiga Telekomunikasi Indonesia getting 10.8 percent stake in the merged Indosat Ooredoo Hutchison business.

CK Hutchison will buy 50 percent stake in Ooredoo Asia by exchanging its 21.8 percent stake in Indosat Ooredoo Hutchison for 33.3 percent stake in Ooredoo Asia, and will acquire an additional 16.7 percent stake from Ooredoo Group for a cash consideration of $387 million.

Following the transactions, CK Hutchison and Ooredoo will each own 50 percent of Ooredoo Asia, to be renamed Ooredoo Hutchison Asia, which will retain 65.6 percent stake in the merged company.

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 percent stake, Tiga Telekomunikasi Indonesia holding 10.8 percent stake, and other public shareholders holding approximately 14 percent.

Vikram Sinha will be the CEO and Nicky Lee the 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.

JP Morgan is acting as exclusive financial advisor to Ooredoo Group. Goldman Sachs & Co. and HSBC are acting as joint financial advisors to CK Hutchison. Barclays is acting as financial advisor to Indosat Ooredoo.