Jakarta: Qatar's Ooredoo and CK Hutchison Holdings are exploring a deal to merge their Indonesian units, Indosat and PT Hutchison 3 Indonesia, the two companies said on Monday.
A deal between the two would allow them to better compete against state-backed Telkomsel, which controls around half of the Indonesian cellular market.
Ooredoo, which owns a 65% stake in Indosat, said the two companies have signed a non-legally binding memorandum of understanding which is valid until April 30, 2021, it said in a statement.
"Ooredoo is in the early stages of assessing the merits of such a potential transaction," it said.
CK Hutchison said in a separate statement the potential transaction is subject to due diligence, agreement on terms, signing of definitive agreements and obtaining all required corporate and regulatory approvals.
Analysts say the talks come amid a government push for consolidation of the market.
"Consolidation is also needed to support telco companies to prepare their investment for the initial deployment of 5G in Indonesia", Indonesian communications minister Johnny Plate told Reuters ahead of Ooredoo's announcement.
