The businesses announced on Thursday that PT Telekomunikasi Selular (Telkomsel), Singapore Telecommunications' (Singtel's) Indonesian affiliate, has agreed to merge with its parent company's IndiHome broadband subsidiary to establish a business worth 58.3 trillion rupiah (US$3.9 billion).
The move is being made as Telkomsel seeks to increase its presence in Indonesia's fixed broadband sector, which is among the fastest-growing in the world with a penetration rate of 14% compared to 40% in Southeast Asia.
"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, which owns 35 per cent of Telkomsel.
The remaining 65% of Telkomsel is owned by PT Telkom Indonesia, which also fully owns IndiHome.
The merger is the most recent reorganisation effort among Asian telecom giants in recent years as they prepare for the shift to a digital economy and 5G.
As part of the concluding stages of its restructuring, Telstra, an Australian firm, created a new holding company last year. To reduce expenses, NTT, a Japanese telecommunications company, took its wireless carrier division private in 2020.
If the Indonesian transaction is successful, Singtel will hold 29.6% of the expanded integrated mobile and fixed broadband provider, according to Singtel.
As per Singtel, the transaction is anticipated to close in the early third quarter of 2023. The deal is expected to be completed in the early third quarter of 2023, Singtel said.IndiHome has a 75.2% market share in Indonesia.
Singtel's stock has down 1.9% so far this year. Shares were last sold for S$2.52 each.