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Telkom to merge IndiHome with Telkomsel
Deputy State-owned Enterprises Minister Kartika Wirjoatmodjo said the merger would be concluded in May, and the combined product could be launched on July 1.
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PT Telkom Indonesia is a multinational Indonesian telecommunications conglomerate (Shutterstock/Faishalabdula)
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T Telkom Indonesia has signed an agreement to spin off its home internet service, IndiHome, to merge with its cellular services arm, Telkomsel.
In its disclosure to the Indonesia Stock Exchange (IDX), the state-owned telecommunications giant stated the need to maintain its competitiveness in the domestic telco sector as the reason for this spin-off.
"To improve the quality of services provided to the customers, Telkom plans to combine its fixed broadband and mobile broadband (cellular) into one subsidiary, which is Telkomsel," Edwin Sebayang, vice president of investor relations at Telkom, said in a statement on Thursday.
Under the agreement, the value of the IndiHome segment to be spun off is Rp 58.25 trillion (US$3.9 billion). At the same time, Telkomsel shareholder Singtel, a Singapore-based telco firm, decided to subscribe to new shares of the mobile carrier through a cash injection of Rp 2.71 trillion, based on the valuation used by Telkom to carry out the proposed spin-off.
After the spin-off, Telkom's share in Telkomsel would increase from 65 percent to 69.9 percent, while Singtel's ownership is set to be diluted from 35 percent to 30.1 percent.
Challenging telco landscape
Ririek Adriansyah, president director at Telkom, said the telco industry in Indonesia had become more challenging as prices for data packages dropped while usage grew. Thus, the firm's margin would be affected.
