More Indonesian consolidation as Telkomsel merges with IndiHome

Indonesia’s dominant MNO is merging with its dominant ISP but both were already owned by Telkom Indonesia anyway.

Telkom is a communications conglomerate that owns 100% of IndiHome and 65% of Telkomsel, the rest being owned by Singtel. If this move goes through, the combined operations will be 70.4% owned by Telkom but Singltel has committed to buying an extra 0.5% of the combined company, which is valued at $3.9 billion.

“The integration process of broadband services for TelkomGroup’s retail customers is part of Telkom Group’s ‘Five Bold Moves’ business transformation to strengthen the company’s position as a market leader in digital telecommunications in Indonesia,” said Telkom Group CEO Ririek Adriansyah.

“Together with our shareholders, Telkom and Singtel, we believe that integrating IndiHome services will further strengthen Telkomsel’s position in the telecommunications and digital industry in Indonesia while proving our commitment to advance and expand our business portfolio, especially in Fixed Mobile Convergence services,” said Hendri Mulya Syam, President Director of Telkomsel.

“We believe this is a rare opportunity for Telkomsel to tap into the high-growth fixed broadband market in Indonesia by partnering the country’s largest broadband operator, which is profitable and cash-generating,” said Yuen Kuan Moon, Group CEO of Singtel. “Given the post-pandemic demand for high-quality broadband and the global shift to fixed mobile convergence, this move will help Telkomsel entrench its position as Indonesia’s leading integrated telco and greatly enhance its growth prospects.”

Rare opportunity? Surely Telkom could have combined the two companies it owned at any time. The move certainly will entrench Telkomsel’s dominance, however. It already had around two thirds of Indonesia’s mobile subscribers and now it’s got three quarters of the broadband ones. It follows the recent merger of Ooredoo and CK Hutchison’s Indonesian operations, so it seems they have a very relaxed approach to competition policy there.

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