Telkom Indonesia, the country’s largest telecommunications company, is merging its mobile and broadband businesses in an effort to keep up with new market trends. Bloomberg.com stated that Telkom partnered with Goldman Sachs Group Inc. as the financial advisor for the merger. The merger is expected to create a value of more than $30 billion.
The move is the latest in a series of efforts by the company to shake up its business model and respond to increasing competition from newcomers. It is expected to create one of the most competitive telecommunications industries in Southeast Asia.
The merger will allow Telkom Indonesia to better compete with other telecom providers in terms of quality of service as well as product offerings. It will also allow Telkom Indonesia to maintain its leading position in terms of market share.
Why Telkom Indonesia is the Smart Choice
Telkom Indonesia has a large market share in the telecommunications industry with over 175 million customers and 119.8 million mobile data users. They are the only company that provides access to all four major mobile operators in Indonesia.
The company offers a range of services, including fixed and mobile telephony, internet access, data transmission, and digital TV. Telkom has been operating since 1995 and is now the leading telecommunications provider in Indonesia with over 60 percent market share by revenue.
Telkom Indonesia’s growth is mainly driven by their focus on digital Indonesia. They have invested heavily in building a strong digital infrastructure and their efforts are starting to pay off. They now have over 20 million broadband subscribers, effectively doubling last year’s subscriber count.
Fixed broadband subscribers per 100 People
Telkom has gained exposure to both urban and rural areas in Indonesia. Telkom’s growth strategy includes investing in infrastructure to provide faster internet connections for its customers. In 2021, Telkom announced that its infrastructure services unit, known as Mitratel, was on a mission to purchase over 4,000 towers and raised approximately $1.3 billion in a Jakarta initial public offering, putting Indonesia’s digital economy on track to double to $146 billion in 2025.
Opportunity for Growth
The telecommunications industry in Indonesia has seen strong growth over the past few years, driven primarily by the increased adoption of mobile and fixed-line broadband services.
The telecommunications industry in Indonesia is also relatively diverse, with several key players offering services across the mobile and fixed-line industries. Telkom has been gradually reducing its reliance on voice services for some time now; instead, it has been focusing on data services such as broadband and fiber-optic internet connections. Indonesia is one market that has lower penetration rates which creates a stronger demand for services.
Telkom shares have climbed about 9% this year, valuing the company at around $29.6 billion. They rose 3.1% on Thursday, their largest increase in more than two weeks (Aug. 18, 2022), on expectations that the company will benefit from measures in Indonesia’s annual budget supporting 30 million small businesses using digital systems by 2024. – Bloomberg.com
Telkom Indonesia’s share price has been rising since the announcement was made. The move also reflects the growing importance of digital technology in general and the abundance of growth Indonesia has within the market.