Govt finally approves XL’s Axis acquisition

JAKARTA. The Information and Communication Technology Ministry has finally granted its approval to the acquisition of PT Axis Telekom Indonesia (Axis) by PT XL Axiata (EXCL).

The ministry said on Sunday that it had given its consent, as the telecommunication industry’s regulator, through a letter dated Nov. 28.

 “The ministry approved the acquisition plans, which would be followed by a two-phased merger as outlined by both operators,” it said in a release. XL Axiata, a subsidiary of Malaysia’s Axiata Group Berhad and the market’s second largest operator, announced in September it had signed conditional sale and purchase agreement (CSPA) with Saudi Telecom Company (STC) and subsidiary, Teleglobal Investments B V (Teleglobal), to acquire their 95 percent stake in Indonesian mobile operator Axis for US$865 million.

However, the ministry said in the statement that the terms for the approval required XL Axiata and Axis to relinquish several blocks of allotted frequency.

 “The operators must jointly return two blocks numbering 8 and 12,” ministry spokesman, Gatot S. Dewa Broto, said.

 “We want the operators to return the blocks expediently,” he told The Jakarta Post.

Under the current arrangement, block 8 is in use by XL Axiata while block 12 is under Axis. Both blocks lie on the 2.1 gigahertz frequency band, which operators utilize for third generation (3G) networks.

The ministry added it would then hold a selection process to decide what operators could take over the returned blocks.

 “The selection process [will probably occur] next year,” Gatot added. Frequencies have been in high demand as operators expand their networks and subscriptions bases.

PT Telekomunikasi Selular (Telkomsel), the largest operator nationwide, and PT Hutchison 3 Indonesia (Tri), the market’s youngest operator, have both requested additional frequency on the 1.8 gigahertz frequency band.

The ministry further pointed out that the terms had taken into account input from all market players and not just the regulators. (Mariel Grazella/The Jakarta Post)