Telkom Indonesia to Integrate IndiHome Into Telkomsel

Indonesia's largest telecommunications company, Telkom, has announced a Conditional Spin-off Agreement with its mobile unit subsidiary, Telkomsel, to integrate its fixed broadband business, IndiHome. The integration is expected to support Telkom's Fixed Mobile Convergence (FMC) strategy and strengthen its position in the market.

Highlights

  • IndiHome, Indonesia's largest fixed broadband business, will be integrated into Telkom's mobile unit subsidiary, Telkomsel.
  • The integration is part of Telkom's Fixed Mobile Convergence (FMC) strategy to strengthen its position in the market.
  • Singtel has agreed to exercise its pre-emptive right to purchase an additional 0.5 percentage point share in the enlarged entity for IDR 2.7 trillion in cash.

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Telkom Indonesia to Integrate IndiHome Into Telkomsel

Telkom, the largest telecommunications company in Indonesia, has signed a Conditional Spin-off Agreement (CSA) with Telkomsel to integrate IndiHome, Telkom's fixed broadband business, into Telkomsel, its mobile unit subsidiary. IndiHome is 100% owned by Telkom and is Indonesia's largest fixed broadband business. Telkom (65%) and Singtel (35%) have already given support for the transaction.




Also Read: Nokia and Indosat Partner for Private Wireless Network

Integration part of Fixed Mobile Convergence Strategy

The integration of IndiHome is expected to strengthen Telkom's position in the market and support its Fixed Mobile Convergence (FMC) strategy. The CSA, which is subject to approval from Telkom's independent shareholders, is valued at IDR 58.3 trillion and involves the issuance of new primary shares in Telkomsel to Telkom in exchange for IndiHome. As a result, upon legal completion of the spin-off, Telkom will hold a 70.4% share in Telkomsel, while Singtel will hold 29.6%.

Singtel and Telekom's Stake

According to the statement, At the time of the integration, Singtel has agreed to exercise its pre-emptive right to purchase another 0.5 percentage point share in this enlarged entity by subscribing to new primary shares of Telkomsel post-integration for IDR 2.7 trillion in cash. This brings Singtel's effective interest in Telkomsel to 30.1%, with Telkom's stake at 69.9%.

IndiHome, Broadband Market Share

IndiHome has a 75.2% market share in Indonesia, which has a fixed broadband penetration rate of just 14%, compared to 40% across Southeast Asia. The integration of IndiHome is expected to boost Telkomsel's high-growth fixed broadband market in Indonesia, as Fixed broadband ARPUs are around six times that of mobile connections in Indonesia. Telkomsel will manage Telkom Group's Business to Consumers (B2C), while Telkom's operational focus will be on Business to Business (B2B).

Also Read: Singtel Announces 5G Security-As-A-Slice Capability

According to TelkomGroup CEO Ririek Adriansyah, the integration of broadband services is part of Telkom Group's "Five Bold Moves" business transformation to strengthen its position as a market leader in digital telecommunications in Indonesia. Telkomsel President Director Hendri Mulya Syam expressed enthusiasm for the integration and said it would strengthen Telkomsel's position in the telecommunications and digital industry in Indonesia.

The CSA is expected to be completed in the early third quarter of 2023, subject to the fulfilment of certain conditions, including the receipt of approvals from Telkom's shareholders.

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Telecom Analyst

Passionately following the Indian #Telecom Industry for over a decade from Business, Consumer and a Technical perspective. My primary focus area is Consumer & Digital Experience.

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