Recent months have seen an unprecedented level of M&A activity across Asia’s mobile markets, with eye-catching deals in Thailand, Malaysia, Taiwan, and Indonesia.
Today we examine the players reshaping the Asian telecom landscape.
Quickfire Indonesia Merger Creates Strong Challenger
Market: Indonesia
Participants: Indosat Ooredoo and Hutchison 3 Indonesia (Tri)
Estimated Valuation: $6 billion
Deal Announced: September 2021
Completion Date: January 2022
In September 2021, Qatar-based Ooredoo and CK Hutchison Holdings of Hong Kong announced definitive transaction agreements for the proposed merger of their respective telecom businesses in Indonesia: Indosat Ooredoo and Hutchison 3 Indonesia (Tri).
This agreement created an enlarged entity named Indosat Ooredoo Hutchison (IOH), which they indicated would be valued at around $6 billion.
The situation unfolded quickly. A matter of months later, in January 2022, the two parties announced the completion of the deal. The newly-combined IOH is now the archipelago’s second-largest mobile network operator behind Telkomsel.
The situation unfolded quickly. A matter of months later, in January 2022, the two parties announced the completion of the deal. The newly-combined IOH is now the archipelago’s second-largest mobile network operator behind Telkomsel (Telekomunikasi Selular), with 100 million mobile subscriptions and estimated annual revenue of approximately $3 billion.
Ooredoo and CK Hutchison retain a controlling 65.6% ownership stake in the merged company, which remains listed on the Indonesian Stock Exchange. The government of Indonesia retains a 9.6% shareholding, Tiga Telekomunikasi Indonesia holds a 10.8% shareholding, and other public shareholders hold approximately 14.0%.
Thai Tie-Up To Take Top-Spot?
Market: Thailand
Participants: True Corp and Digital Total Access Communication (DTAC)
Estimated Valuation: $8.6 billion
Deal Announced: November 2021
Completion Date: TBC; expected in Q2 2022
In November 2021, True Corp and Digital Total Access Communication (DTAC)—Thailand’s second and third-largest mobile operators, respectively—agreed to merge their operations as they seek to topple Advanced Info Service (AIS) and create a new market leader.
Thai agribusiness conglomerate Charoen Pokphand Group controls True Corp, while Norwegian telco Telenor is DTAC’s largest shareholder. When completed, the enlarged player is likely to be worth an estimated $8.6 billion.
On February 18, 2022, the respective boards of the two companies approved the merger to create a new listed telecom and tech company. Pending regulatory approval, the next stage of the merger process will involve a voluntary tender offer to allocate shares in the new company (“NewCo”) to the shareholders of True and DTAC.
The Thai mobile market currently comprises three privately owned mobile operators—AIS, DTAC, and True—and state-backed operator National Telecom (NT).
NT was formed by the January 2021 merger of CAT Telecom and TOT. AIS, whose backers include Singtel Group, dominated the market with 44.5% of all mobile subscriptions at December 2021. By contrast, True served 32.5% of the market at that time, with DTAC claiming a 19.7% share of the spoils.
Malaysian Mobile Mega-Merger
Market: Malaysia
Participants: Celcom Axiata and Digi Telecommunications
Estimated Valuation: $12.1 billion-$15 billion
Deal Announced: June 2021
Completion Date: TBC; expected in Q2 2022
The Malaysian mobile sector is home to no fewer than six network operators: Celcom Axiata, Digi Telecommunications, Maxis, Telekom Malaysia, U Mobile, and YTL Communications (Yes).
The landscape is expected to change dramatically in the coming years, following the June 2021 announcement that Malaysian group Axiata and Norway-based Telenor Group had signed an agreement for the proposed merger of their local subsidiaries Celcom and Digi.
The companies said the merged entity has a “pre-synergy” equity value of nearly $12.1 billion. But Digi’s share price rose after the merger announcement, increasing its value—and the value of the enlarged player—to around $15 billion.
The companies said the merged entity has a “pre-synergy” equity value of nearly $12.1 billion. But Digi’s share price rose after the merger announcement, increasing its value—and the value of the enlarged player—to around $15 billion.
Completion of the transaction will be subject to regulatory approval, although it remains to be seen whether the authorities will balk at a tie-up between the players—two of the country’s three largest mobile operators in terms of subscriptions.
Nevertheless, both parties remain optimistic and, barring unforeseen circumstances, the deal is expected to close by the second quarter of 2022.
Should the deal come to fruition, the two parents are set to be equal partners in the merged venture, each taking a 33.1% ownership stake in the enlarged company.
Taiwanese Takeover Triggers Transformation
Market: Taiwan
Participants: Taiwan Mobile and Taiwan Star
Estimated Valuation: $1 billion
Deal Announced: December 2021
Completion Date: TBC; expected in Q3 2022
On December 30, 2021, Taiwan Mobile—the country’s second-largest mobile operator in terms of subscriptions—unveiled plans to acquire smaller rival Taiwan Star.
Taiwan Mobile will be the surviving company post-merger, with Taiwan Star shareholders gaining a roughly 7.4% stake in the enlarged company as a result of the deal. To facilitate the transaction, Taiwan Mobile says it will issue a total of 282,222,106 new shares to Taiwan Star shareholders. Said Taiwan Mobile chairman Daniel Tsai, “This merger will deliver more than the sum of its parts and be good for consumers.”
Post-merger, the companies will preside over a 5G network comprising 11,000 base stations and a combined 100MHz block of 3.5GHz spectrum.
As of December 31, 2021, Taiwan Mobile claimed a 23.5% market share, with Taiwan Star serving 8.6% of mobile customers. The enlarged company will retain second place in the mobile market, with a 32.1% share, slightly adrift of market leader Chunghwa Telecom (38.5%).
The deal is expected to conclude by September 30, 2022, following approval from the National Communications Commission and the Fair Trade Commission.
EasTone Promises After Second Taiwanese Merger
Market: Taiwan
Participants: Far EasTone and Asia Pacific Telecom
Estimated Valuation: $882 million
Deal Announced: February 2022
Completion Date: TBC; expected in Q3 2022
With five mobile players currently operational in Taiwan, it was perhaps unsurprising that the Taiwan Mobile-Taiwan Star merger had an immediate knock-on effect, prompting two local players to negotiate a tie-up.
With five mobile players currently operational in Taiwan, it was perhaps unsurprising that the Taiwan Mobile-Taiwan Star merger had an immediate knock-on effect, prompting two local players to negotiate a tie-up.
In February 2022, Far EasTone (FET) and Asia Pacific Telecom (APT) unveiled plans to merge their operations in a share swap deal valued at around TWD24.7 billion ($882 million). Outlining the complex share deal, the official press release noted that FET expects the deal to conclude by September 30, 2022, subject to regulatory approval.
It’s understood that the merged entity will continue to trade under the FET banner, while the APT brand will be discontinued. In September 2020, FET had agreed to acquire an 11.58% stake in APT to become the latter’s second-largest shareholder.
As of December 2021, FET ranked third in the market, claiming a 22.8% market share. For its part, APT is the fifth of the five local operators, with a market share of 6.7%. Post-merger, the enlarged operator will remain in third place, however, as a result of the aforementioned tie-up between Taiwan Mobile and Taiwan Star.
Tom Leins
Tom Leins is a Senior Research Analyst for TeleGeography’s GlobalComms Database. Based out of the company’s UK office, he also contributes to the company’s daily CommsUpdate newsletter, which includes his popular weekly MVNO Monday round-up. MVNO industry aside, Tom has developed a strong specialization in the U.S., Latin America, and the Caribbean, tracking mergers and acquisitions, spectrum auctions, regulatory developments, market opportunities, and growth trends.