Indosat Ooredoo Hutchison hails successful merger

Indosat Ooredoo Hutchison hails successful merger

Indosat Ooredoo Hutchison (Indosat) president director and CEO Vikram Sinha (pictured) said the operator proved doubters of its US$6 billion mega-merger wrong, and the company is poised to achieve growth in Indonesia.

In a media roundtable at Mobile World Congress Barcelona this week, Sinha highlighted how industry financial institutions Fitch Ratings and Moody’s lowered their credit rating of the operator, expressing a lack of confidence in the operator’s outlook. The merger was sealed just over a year ago (February 2022).

He pointed to the company’s recent financial results. Total revenue increased by 49% to IDR46.7 billion (US$3.05 billion), net profit soared by 76% to IDR1.5 billion, and data traffic nearly doubled among its 102.2 million subscribers (this was up by 3.6 million).

"We have defied expectations and become the successful merger in the world. Indosat is not just good for the industry; it's good for Indonesia. We will continue to drive the digital revolution and create value for all our stakeholders," concluded Sinha.

Sinha revealed ambitions to connect 21 million unconnected Indonesians from remote areas, to drive new revenues. Another key driver for growth will be in engaging with the millions of small and micro enterprises of Indonesia.

Indosat’s strategy here will not involve only laying out the necessary coverage but also enhancing and providing services such as money lending and banking services.

“The first step is connecting them to a good experience. Help them make US$10, they will be happy to give us $2. People in Indonesia are almost willing to pay three to four times more for connectivity tools that aid their productivity, which shows the demand”, said Sinha.

Looking ahead to 5G, Sinha said Indosat is preparing to purchase spectrum in the C-band when regulators hold an auction, highlighting the airwaves as integral to its 5G strategy. Indosat currently possesses 400 live 5G sites across eight urbanised and densely populated locations such as Jakarta and Bali.   

“It is not easy to build fibre to sites because of the unique terrain of Indonesia. The key learning here is that 5G is not a speed game. We have to be ready to monetise with the right ecosystem to ensure it actually benefits the country, helping solve real challenges in industries,” said Sinha.

He noted Indonesia has 77 million households but only around 11% have home broadband, a potential point for growth through 5G for the operator.

When asked about its recent tower deals when Indosat sold around 1,630 tower sites this year, with 997 going to Mitratel and 600 to dhost in a 10-year leaseback. Sinha revealed the net value of the towers was around US$118 million, but Sinha stated there are no immediate plans to spend the cash as of yet. 

In other news from Indosat, the operator signed a memorandum of understanding with the GSMA to increase Indonesia's environmental and economic resilience by developing mobile-led mitigations for a range of climate change issues.

The agreement will see the industry body and operator conduct conservation programmes on mangroves, to boost the productivity of shrimp and crab farmers using the Internet of Things (IoT) technology in North Kalimantan, Indonesia.

Sinha said: "Indonesia continues to play an important role in promoting the control of world climate change. The priority issues discussed at the Climate Sustainability Working Group (CSWG) as part of the G20 series form the basis of our cooperation with the GSMA. We believe that this concrete action utilizing digital technology will increase the environmental and economic resilience of the surrounding communities in North Kalimantan. This sustainable program will also positively impact Indonesia's nature conservation while improving the nation's economy in the future."

GSMA chief regulatory officer and president mobile for development foundation John Giusti, added: “The GSMA is reinforcing its commitment to addressing global climate challenges by supporting concrete programs that leverage digital innovation to tackle climate impacts. We undertake this work alongside our broader support of the mobile industry’s efforts to achieve Net Zero.

The collaboration between Indosat Ooredoo Hutchison and GSMA Mobile Innovation Hub is a great example of how mobile can play a vital role in connecting vulnerable communities to digital solutions that enable them to improve climate resilience. Mangrove forest conservation is a global need across many coastal communities, and pilot programs such as this bring invaluable learnings that can be applied and scaled.”

The chief executive also highlighted close collaboration with infrastructure vendor partners for its success, a “partner first approach” he described. This has enabled the operator to complete integration processes in 12 months instead of two years as initially predicted.

“We did it with a partner-first approach, at the highest level we discussed with our vendors that we need to get together to make it (the merger) successful and how they can support us in this,” said Sinha.

Sinha also pledged the operator will deliver Indonesia a gross merchandise value, a measure of the digital economy, of up to US$400 million in three to five years on the back of its connectivity.

"We have defied expectations and become the most successful merger in the world. Indosat is not just good for the industry; it's good for Indonesia. We will continue to drive the digital revolution and create value for all our stakeholders," concluded Sinha.

To learn more about Indosat Ooredoo Hutchison, please click here.

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