KUALA LUMPUR -- Malaysia-based telecommunications conglomerate Axiata Group is acquiring a majority stake in Indonesian pay TV and broadband service provider PT Link Net for 8.72 trillion rupiah ($606 million), Axiata announced Thursday.
Axiata's Indonesian units, XL Axiata and Axiata Investments (Indonesia), have signed a share purchase agreement to jointly acquire a combined 66.03% stake in Link Net from Asia Link Dewa and PT First Media, Axiata said in a news release. Link Net is valued at 13.21 trillion rupiah.
With the majority stake, Axiata has triggered a mandatory tender offer to acquire the remaining 33.97% of Link Net, in line with Indonesian regulations. The entire deal is expected to be completed in the third quarter of this year.
"Both XL Axiata and Link Net are well placed to generate synergies through their combined positions in wireless communication services, extensive relationships with customers in Indonesia and strong strategic alignment," Izzaddin Idris, Axiata's president and group CEO, said in the statement.
"By leveraging the strengths of our telco business from XL Axiata and Link Net's broadband and connectivity solutions, we look forward to delivering compelling customer-focused converged solutions for the home and enterprise segments as Indonesia continues to advance its digital economy," he said.
Axiata also expects to benefit from Link Net's strong cash flow profile and regular dividend payouts, while solidifying its position as a top regional digital player, the statement said.
Link Net began commercial operations in 2000 and has risen to be a leading provider of high-speed broadband and cable TV in Indonesia, reaching 2.8 million homes across 23 cities with a subscriber base of approximately 860,000, according to the statement.
Link Net's revenue for the nine-month period that ended on Sept. 30 rose 9.8% to 3.24 trillion rupiah year on year, while pretax profit grew 14.4% to 1.87 trillion rupiah.
According to a report by Analysys Mason, Indonesia is one of the most attractive fixed broadband markets with present household penetration of just 13.4%.
It is also one of the world's fastest-growing broadband markets with potential for significant expansion of fixed connections at a compound annual growth rate of about 14.4%, according to Analysys Mason. Household penetration, meanwhile, is expected to increase to 27.5% by 2026, driven by a growing market, escalating data use and Indonesia's increasing per capita disposable income.