Goldman Is Among Banks Picked for $30 Billion Telkom Merger

Manuel Baigorri, Elffie Chew and Fathiya Dahrul, Bloomberg News

BC-Goldman-Is-Among-Banks-Picked-for-$30-Billion-Telkom-Merger , Bloomberg

(Bloomberg) -- PT Telkom Indonesia has picked advisers for the merger of its broadband and wireless businesses as part of an overhaul of the state-owned telecommunications group.

The Jakarta-listed company has appointed Indonesian financial group PT Bank Mandiri to work on the transaction, President Director Ririek Adriansyah said in response to a Bloomberg News query. Telkom has also picked Goldman Sachs Group Inc. to help with the process, according to people familiar with the matter. A merger of the businesses would create an entity valued at more than $30 billion, the people said.

The mobile unit, known as Telkomsel, is 65% owned by Telkom, with Singapore Telecommunications Ltd. holding the remaining 35% stake, its latest annual report shows. Telkomsel has selected HSBC Holdings Plc to help advise on the transaction, while Singtel has picked Citigroup Inc. as its own financial adviser, the people said, asking not to be identified because the matter is private. The broadband business is wholly owned by Telkom.

Adriansyah confirmed Mandiri’s appointment but declined to comment on other details of the merger, while a Mandiri spokesperson referred Bloomberg News to Adriansyah’s comment. Representatives for Citigroup, Goldman Sachs, HSBC and Singtel declined to comment.

Shares in Telkom have risen about 8% in the year to date, valuing the company at nearly $28 billion.

Investment banks would welcome such a transaction for its ability to propel them in the league table rankings, particularly in a year when mergers and acquisitions activity is down globally. There have been $2.1 trillion worth of M&A deals this year, down 29% from the same period in 2021, according to data compiled by Bloomberg.

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Telkomsel is the largest mobile provider in Indonesia, according to Bloomberg Intelligence. The business counts 169.7 million subscribers at the end of the first half of 2022, according to its investor presentation. Telkom’s IndiHome fixed broadband service had 8.9 million subscribers at the end of the period, the presentation showed.

The Indonesian group had been speaking with financial advisers for the past several months about a potential combination of the businesses, Bloomberg News has reported. A merger is part of a plan to eventually separate its consumer-facing operations from those focused more on corporate customers.

The business reorganization comes as Indonesia is poised for growth in areas such as e-commerce and financial technology. Telkom counts a wide range of assets from mobile and broadband to satellite, towers and digital content.

--With assistance from Anurag Kotoky.