Indosat And Tri Officially Merger With Transactions Worth Rp85.5 Trillion

Illustration of the merger of Indosat and Tri (Teknolog.id)

JAKARTA - Indosat and Tri are reported to have officially announced a merger with a value of IDR 85.5 trillion. From this combination, a new entity was born, namely Indosat Ooredo Hutchison. The development process for the new entity is predicted to be completed by the end of 2021.

From the results of the merger, cellular operator Indosat Ooredoo Hutchison is said to be the second largest after Telkomsel. Indosat Ooredoo Hutchison is predicted to earn an annual revenue (revenue) of around US$3 billion or equivalent to Rp42.7 trillion.

Meanwhile, the combined EBITDA (earnings before interest, taxes, depreciation and amortization) is predicted to reach US$1.3 billion or equivalent to Rp18.5 trillion.

Muhammad Ridwan Effendi as Secretary General of ITB's Center for Telecommunication Policy and Regulatory Studies commented on the merger of the two companies by saying that the combination of Indosat Ooredoo and Tri Indonesia is expected to reach more consumers than XL Axiata consumers.

Meanwhile, in terms of infrastructure, the combination of the two companies will have 97,863 BTS which will use a total spectrum of 145 MHz. In fact, before Indosat Ooredoo merged, it only had 95 MHz, while Tri had 50 MHz. The combined 1,800 MHz spectrum from Indosat and Tri is also expected to be abundant and more abundant than cellular operators Telkomsel and XL Axiata.

"The combined 1,800 bands from Tri and Indosat become very dominant compared to other operators, almost twice that of Tellkomsel and XL Axiata," said Ridwan.

Apart from Ridwan, telecommunications observer Moch S. Hendrowijono stated that although Indosat Ooredoo Hutchison is predicted to be the second largest telecommunications company in Indonesia, it seems that it will be difficult to compete with Telkomsel's dominance. Hendrowijono said that the annual revenue and number of Indosat Ooredoo Hutchison customers were still far below the number of subscribers owned by Telkomsel.

Hendro also assessed that after the merger, customers have the potential to shrink if they reflect on the experience of the acquisition of Axiata by XL a few years ago, which caused customers to switch to other operators after the acquisition. Because customers no longer get the same service as before.

“I estimate that when the merger occurs, the number of subscribers will not automatically be 102 million, but far below 100 million, only around 76-80 million. This is because many of Tri's ex-customers have been taken by other operators," said Hendro.

In the second quarter of 2021 financial statements, the largest cellular operator in Indonesia, Telkomsel has 169.2 million subscribers. Meanwhile, in 2020, the company's total income has reached IDR 87.1 trillion. This amount is more than twice the predicted annual revenue of Indosat Ooredoo Hutchison.