Gojek's 'Marriage' With Grab: Telkom, Astra, Lippo, And Emtek Will Make Profits?

Illustrated. (Irfan Meidianto / VOI)

JAKARTA - Grab Holding Inc. and PT Aplikasi Karya Anak Bangsa, aka Gojek, have reportedly agreed to merge their operations in Southeast Asia. A number of companies such as Telkom, Astra, Lippo and Emtek that have shares in Gojek and Grab, are also expected to benefit from the merger of the two companies.

The two business entities are said to have made rapid progress in discussing this merger plan. In fact, another thing that is being discussed is the issue of operations in Indonesia.

This merger will cover all Grab and Gojek services, from transportation services, food and package delivery, to digital payments and financial services.

If done, this will be the merger with the greatest value in Southeast Asia. In addition, the merger of Grab and Gojek will end the drama of competition between the two companies to gain dominance in the online transportation application business, which is now transforming into a superapp.

If this merger goes according to plan, the impact that will be felt will not only be experienced by Gojek and Grab. A number of companies that also hold shares and inject funds into the two startup entities are also expected to benefit. Especially companies that have been listed on the Indonesia Stock Exchange.

Prior to the merger of the two business entities, the telecommunications issuer PT Telkom Indonesia with the ticker code TLKM, through its subsidiary PT Telekomunikasi Selular (Telkomsel), injected funds into Gojek. Previously, the automotive issuer PT Astra International Tbk (ASII) made an investment in Gojek.

Telkomsel has successfully invested 150 million US dollars or Rp2.1 trillion in funds into Gojek. The investment is believed to pave the way for these cellular operators to reap new revenue from digital services.

In 2019, Astra and Gojek announced that they had formed a joint venture company engaged in the vehicle rental business for Go-Car driver partners. The US $ 100 million investment from Astra is part of the Series F funding round to Gojek. Through this fresh capital, Astra has invested in capital worth US $ 250 million to Gojek.

Photo: Doc. Astra International

Not only Gojek has big investors, behind Grab there are also big companies like the Lippo Group. The conglomerate led by John Riady is one of the investors in Venture Capital (VC) who invested in Grab since the beginning of 2016. In fact, the investment value of VC, in which the Lippo Group is located, is US $ 100 million.

In addition, the company under the control of Eddy Kusnadi Sariaatmadja, PT Elang Mahkota Teknologi Tbk (Emtek) has also become one of the investors in Grab since 2017.

Profitable Thanks to Business Synergy

Capital market analysts assess that the merger of the two largest transportation platforms can benefit the capital injecting companies in the respective online transportation companies.

Binaartha Sekuritas analyst, M. Nafan Aji Gusta Utama said that Telkom can strengthen its business lines in the technology sector. According to Nafan, Telkom as a telecommunications giant in Indonesia will certainly benefit from the digital business side.

Moreover, in the future, Nafan said, Indonesia is welcoming the era of digitalization, in which Gojek and Grab are the two largest technology companies in the country.

"They will synergize with each other, because currently the business of many companies is going digital. Gojek and Grab also have a large market share, and this will certainly benefit Telkom. Astra could also later enter digital services," he told VOI, Thursday December 3rd

Meanwhile, Emtek and Lippo are likely to be integrated into the finance and banking lines that are affiliated with Grab. Moreover, the Gojek and Grab platforms have a very wide ecosystem and a large customer base.

In addition, the two platforms have also been used as online payment applications. With a large number of customers and making online payments in this application, companies can finally hold cash outside of banking institutions.

Merger Agreement Details

As is known, Grab is present in eight countries and is now valued at more than US $ 14 billion, while Gojek has a valuation of up to US $ 10 billion and has a presence in Indonesia, Singapore, the Philippines, Thailand and Vietnam.

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Actually, the merger deal has been pushed by SoftBank since Masayoshi Son visited Indonesia in January, but there has been no progress since then. Long-standing competition and divergent interests between the leaders of the two companies have led to negotiations at a dead end.

According to one source, as reported by Bloomberg, as quoted on Friday, December 4, a number of points of the agreement still need to be negotiated. He said the final details of the deal were being worked out among the most senior leaders in the two companies. The CEO of SoftBank Group Corp., which is Grab's main investor, Masayoshi Son, also joined the conversation.

If the two join forces, Grab co-founder Anthony Tan will become CEO of the merger entity, while Gojek executives will run a new joint business in Indonesia under the Gojek name.

The source also said that both Gojek and Grab could still run separately for a long time. The merger ultimately aims to become a public company.

Unfortunately, however, representatives of Grab, Gojek, and SoftBank refused to comment on this merger. Talks are still ongoing and may not result in a merger transaction any time soon.

The deal also requires approval from the government, which may have also generated antitrust sentiment about the two startups merging.

Reasons for Merger

Temasek Holdings chief investment analyst Pte Rohit Sipahimalani said Sea's rapid growth from start-up to Southeast Asia's most valuable company in the past 10 years has been the biggest inspiration for local internet companies in recent times.

The rapid development of the Sea Ltd. business. as an e-commerce and digital payments player has sparked a new push for merger talks between Grab and Gojek.

GoPay illustration. (Photo: Unsplash)

Meanwhile, in the Indonesian market, the development of Shopee and ShopeePay is a challenge for the GoPay and OVO markets, which are respectively held by Gojek and Grab.

Sea became a company in 2017 after earning over US $ 720 million in its inaugural public offering. Today, Sea's capitalization is close to US $ 88 billion.

"But they also realize that they need to reach a certain scale, which is why the IPO path is becoming more attractive. I think IPO is the goal of a number of dialogues around mergers and consolidations in the region," he said, as quoted by Bloomberg.

Even so, Rohit declined to comment on the agreement between Grab and Gojek. Although Temasek is also an investor in Gojek, the Singapore investment company did not participate in the negotiations.

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