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tate-run telecommunications giant PT Telekomunikasi Indonesia (Telkom) has officially announced that it is discontinuing a share-swap deal with publicly listed tower operator PT Tower Bersama Infrastructure, reducing the chance of the latter to wholly own the state enterprise'€™s tower business arm.

Telkom stated in a memo recently made available on its website that it was bringing the share-swap agreement, also known as the Conditional Shares Exchange Agreement (CSEA), to an end.

'€œThe CSEA is in the process of termination due to the commissioners'€™ request to terminate the transaction,'€ Telkom stated without any additional information.

Previously in July, the House of Representatives Commission VI '€” overseeing state-owned enterprises '€” scrutinized the CSEA, under which Telkom would have had the opportunity to exchange its 49 percent stake in its subsidiary PT Dayamitra Telekomunikasi (Mitratel) for 5.7 percent of Tower Bersama'€™s enlarged share capital.

Upon the completion of the exchange, Telkom would have had an option to exchange its remaining 51 percent stake in Mitratel for an 8 percent share in Tower Bersama.

Earlier in July, Telkom and Tower Bersama announced that they had extended the deadline for discussions on the deal to the end of March next year, assuming that this would have given enough time for Telkom to gain approval from its board of commissioners '€” a prerequisite to continuing the share swap deal.

Telkom'€™s president director Alex Sinaga previously explained that the deal was aimed at unlocking the potential value of Mitratel by leaving it to Tower Bersama, while Telkom could focus on its main business as a telecommunications operator.

He also stated that under the agreement, Telkom would have had an option to become a simple majority in Tower Bersama by acquiring up to a 50 percent stake in Tower Bersama.

However, during a hearing in July, the House demanded that the state-run company cancel the CSEA and find another strategy to enlarge Mitratel.

Telkom'€™s combined number of Mitratel and Telkomsel towers hit 23,000, surpassing that of the largest independent tower company PT Protelindo (a subsidiary of PT Sarana Menara Nusantara), which has 11,595 towers.

State-Owned Enterprises Minister Rini Soemarno said previously that Telkom'€™s board of directors and commissioners had agreed to cancel the share-swap agreement with Tower Bersama, making it possible for Telkom to terminate the deal with Tower Bersama.

Both Telkom and Tower Bersama were not available for comment during the time of writing.

Telkom previously explained during a hearing with the House that it had two options to develop Mitratel'€™s business, one of which was through the deal with Tower Bersama. The other option was to enlarge the subsidiary and float its shares on the stock exchange.

Shares of Tower Bersama, listed on the Indonesia Stock Exchange (IDX) as TBIG, slumped by 0.76 percent to Rp 6,500 (46 US cents) per piece on Wednesday'€™s close.

Telkom'€™s shares, listed as TLKM, meanwhile, remained unchanged on Wednesday'€™s close at Rp 2,730 per piece.

Telkom is currently 52.6 percent owned by the government and 47.4 percent owned by the public.