Anticipating Rocketed Subscribers of Elon Musk’s STARLINK in Southeast Asia, Axiata - Sinar Mas Re-run Merger Talks Again.
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Anticipating Rocketed Subscribers of Elon Musk’s STARLINK in Southeast Asia, Axiata - Sinar Mas Re-run Merger Talks Again.
Author was creating complete plan to Malaysia AXIATA - Saudi Telecom Merger before executing by client. (Was) contribute preliminary talks for set-up Russian Telecom business in Indonesia.
Minister Budi Gunadi Sadikin accompanies VP Kamala Devi Harris, around 3am Jakarta Sept. 6th / around 4pm DC Sept. 5th, after VP Kamala landed.
(Minister Budi Gunadi Sadikin, IT expert Sehat Sutardja, and Elon Musk)
Jakarta and Kuala Lumpur 5.11pm
ABSTRACT:
Indonesia all-out set a “red carpet” for Elon Musk. Health Minister Budi Gunadi Sadikin, hours ago accompanied VP Kamala Devi Harris (VP Harris replaced President Biden for ASEAN Summit), was to meet Elon Musk for Starlink. Key person in last 3 years to promote EV in Indonesia, and indirectly to lure Tesla for gigantic investment in Indonesia (*but also other automakers), Arsjad Rasjid, days ago appointed to be Chief of Campaign Manager for Presidential Candidate Ganjar Pranowo, linked to 3x times Election winner, PDI-P. 5 Years ago, Chief of Campaign Manager linked to PDI-P, for Joko Widodo, is Erick Thohir, now Minister of SOE. If Mr Arsjad Rasjid succeeds in delivering Ganjar to be President, very close to Mr Arsjad to be Minister under Ganjar administration.
(Minister Erick Thohir with Australia PM Anthony Norman Albanese. President Joko Widodo still giving a key speech for ASEAN Summit, so, around 10am - Sept 6th / 11pm - Sept 5h in DC, Erick replaces Pak Jokowi to meet PM Albanese)
Erick Thohir has met Elon several times, last time in Doha Qatar. First ever Elon - Erick cooperation is ventilator supply for combating coronavirus in April 2020, the funniest thing, connected by Mr Budi Gunadi. Not surprised if the Indonesian Government works with Elon Musk Starlink and offers satellite Internet in Asean and works with others on 6G technology, no longer 5G technology, to accelerate and or “cut the gap” with leaders of 6G such as South Korea. Especially after months of gigantic corruption in Indonesia by former Telco Minister Johny Plate, worth IDR 9 Trillion (around US$590 million), corruption 4G (not 5G, but FOUR Generation, OLDER GENERATION) wireless base station project meant to fast-track high-speed telecommunication service throughout the country.
Rather than being hampered by the massive corruption of the 4G project, it is very possible for the Indonesian government to accelerate the achievement of 6G, no longer 5G, in collaboration with Starlink. Moreover, the area of Indonesia is very large, extending 5,100 km. If Starlink is very effective in Ukraine in the midst of war, let alone in Indonesia. By providing satellite-based internet coverage, Starlink has the potential to revolutionize internet access in countries like Indonesia, where a significant portion of the population still lacks reliable connectivity, could be a game-changer for countries like Indonesia where internet penetration remains relatively low.
Budi Gunadi (met Elon) not only minister but also former CEO Mandiri, the 8th biggest companies in ASEAN, and very well-known a demand of technology or telecommunication infrastructure for boosting financial literacy
But fear with sophisticated Starlink, a division of SpaceX, makes Telco companies in ASEAN aware. SingTel Singapore has already set a business cooperation with Starlink, with KVH/Starlink Companion Package. Another gigantic company in the Telco business, AXIATA group Brhad, re-run merger talks with Sinar Mas Group. CEO AXIATA - Indonesia Business Unit Dian Siswarini aware that Starlink’s Elon Musk in Indonesia Telco Market or Telco Business make competition very scary, very tight.
START READING:
Malaysia’s biggest wireless carrier Axiata Group Bhd. and Indonesian conglomerate PT Sinar Mas Group have revived talks that could lead to a merger of their telecommunications operations in Indonesia. 2021, talks about “merger” from both sides started, but not yet facing the result. This September, the potential merger was revived again.
The potential merger may anticipate a rocketing of STARLINK subscribers, an Elon Musk company. Starlink is a division of SpaceX. In June 2022, The Indonesia Communication and Informatics Ministry asserted that the Elon Musk-owned Starlink satellite services operating in Indonesia were under an exclusive license and closed network. Elon Musk borrowed $1 billion from the rocket maker to fund the acquisition of social media company X (formerly known as Twitter). The loan, which was backed by Musk’s SpaceX stock, was approved in October 2022 and fully drawn down the same month. Musk repaid the loan with interest in November. The reason for the loan has not been disclosed.
Elon Musk, the CEO of SpaceX, reportedly borrowed $1 billion from the company to finance the acquisition of social media platform X, previously known as Twitter. This loan, secured by Musk’s SpaceX stock, was approved in October and completely utilized in the same month. Musk then repaid the loan with interest in November. The purpose of the loan remains unknown.
The acquisition of X allowed Musk to take ownership of the social media platform, which he subsequently made private by terminating key executives. Details regarding the specifics of the acquisition or the motivation behind the loan have not been disclosed by either SpaceX or X.
*2 Weeks ago, CEO AXIATA - Indonesia Business Unit Dian Siswarini aware that Starlink’s Elon Musk in Indonesia Telco Market or Telco Business make competition very scary, very tight.
Indonesia Health Minister Budi Gunadi Sadikin did score a meeting on August 4th, 2023 with Elon Musk to discuss cooperation with his satellite network, Starlink, to provide low-cost internet access to remote health centres in the archipelago. “With internet access, health service consultations can be done online,” Budi said (Aug 6th, 2023).
At least 50,000 users in Indonesia for X —- formerly known TWITTER, already upgraded to blue verified between January - June 2023, maybe rocketed X subscribers between July - September 2023, a significant revenue for X or Twitter in the middle conundrum, crisis in X. Elon Musk threatened to sue the Anti-Defamation League (ADL) on Monday night, hours after accusing the civil rights organization of causing advertisers to flee his struggling platform. With a lot of “blue verified” subscribers in Indonesia, this is why Elon Musk really interested in Indonesia, both STARLINK and TESLA. Elon Musk and (Minister) Pak Luhut plus (Minister) Pak Budi Gunadi agreed on two things - for TESLA to manufacture materials to make Lithium batteries for EVs in Indonesia and to expand Starlink to bring internet to rural areas. Pak Luhut added that the investments will be quite big.
Imagine if one day Tesla invest to build Gigafactory in —- we can say, near new capital city of Indonesia, IKN NUSANTARA City, and also build train shuttle.
When still military active, Luhut was a lot of duties in East Indonesia and several remote areas. Minister Luhut very well-known about a demand of communication infrastructure.
Communication and Informatics Ministry has granted (June 2022) the Special Non-Geostationary Satellite Anchoring Rights to Telkom Satellite Indonesia (Telkomsat) as a backhaul corporate user in the operation of the closed fixed network of Starlink satellites, not for retail customer services with direct internet access by Starlink. The landing rights are also exclusive, only to Telkomsat for Telkom Group backhaul services, not internet services.
Elon Musk's Starlink officially entered and obtained a license to operate in Indonesia. Meanwhile, the NGSO Special Anchoring Rights must meet the requirements stipulated by the law including reciprocal rights and will be evaluated annually.
Starlink can only operate if the gateway station has been built by Telkomsat. Gateway station is fully invested and owned by Telkomsat, which, without its gateway station, the Starlink satellite cannot function to serve Telkomsat backhaul.
August 4th, 2023, a talk between the Indonesian government and Elon Musk. Minister Luhut and Minister Budi Gunadi Sadikin met Elon Musk. One of the issues is potential maximizing STARLINK business in Indonesia. Indonesia itself actually has many remote areas, especially East Indonesia, that cannot be reached by the internet. However, the government does not seem to have opened up opportunities for Starlink to open internet lines in remote areas of the country. SINAR MAS has a tender in East Indonesia (PALAPA RING - EAST PACKAGE). Coincidence about new MoU between STARLINK - Indonesia Government especially to set up a better communication infrastructure in remote areas (especially in East Indonesia) and reviving merger talks between Axiata and Sinar Mas, which has a tender in remote areas (again, especially in East Indonesia), is very blunt motive.
CK Hutchison approached Axiata about a potential XL deal in 2019 but ended up with the Hutchison - Indosat Ooredoo merger deal (now with the name IOH). Axiata and Norwegian Telecom TELENOR have ended talks to create a telecoms joint venture with nearly 300 million customers across South Asia and Southeast Asia.
Spectrum frequency block owned - bought by Axiata in Indonesia is contiguous with (frequency blocks owned by) Sinar Mas or SMARTFREN. Any Telecom company who has multiple blocks and (the blocks is) contiguous will be very smooth to expand the telco infrastructure and telecom business.
In Indonesia XL Axiata had 58 million subscribers, nearly 2x times Malaysia's population (33 million) as of June 30, 2023, according to its latest financial presentation. Axiata owns about 66% of the firm. Smartfren, a unit of Sinar Mas, had 36 million customers as of the end of 2022. Although fewer subscribers, SINAR MAS has more spectrum blocks, especially after winning a tender “PALAPA RING - East Package” in 2016. The loser competitor for this tender, awkwardly, is AXIATA and INDOSAT.
PT Inti Bangun Sejahtera Tbk (IBST), PT Smart Telecom, and PT Mora Telematika Indonesia (Moratelindo) won 16 trillion rupiah tender of “PALAPA RING - East Package.” Inti Bangun Sejahtera affiliated with Grup Sinar Mas (SINAR MAS GROUP). Smart Telecom is a subsidiary PT Smartfren Telecom Tbk (FREN), owned by SINAR MAS GROUP.
XL Axiata shares have climbed about 18% this year, valuing the firm at $2.2 billion. Smartfren’s stock has dropped about 18%, valuing the company at about $1.2 billion.
The Indonesia Ministry of Communication and Information has officially refarmed radio frequency bands Sunday (February 19th, 2023), 7 months ago. The frequency band is currently used for the purposes of carrying out cellular mobile networks, including Telkomsel, Indosat, SMARTFREN (Sinar Mas), and XL-Axiata.
In accordance with the data from the Directorate of Resources Planning, Directorate General of Resources and Equipment of Post and Information Technology, this rearrangement radio.
At least between 2010-2015, of all radio frequency bands used by cellular cellular network operators, there is still a not contiguous determination of radio frequency bands.
Rearrangement is intended to improve efficiency and optimize the use of radio frequency bands. The expected result is obtaining contiguous radio frequency bands for all cellular operators.
The benefit of establishing an adjoining radio frequency band is that each cellular operator can more freely choose and be flexible in improving the cellular technology it implements. In addition, cellular operators can also choose the type of network shipping that is best suited to the conditions of their cellular service traffic in an area.
In the end, the community of cellular service users will be able to enjoy better and more stable quality networks, especially in the areas of big cities that experience network density (congestion issue).
for the example situation in 2013 (as picture):
blok 1: THREE - CK Hutchison Holdings Ltd (currently HUTCHISON merger with INDOSAT and have a new brand-name Indosat Ooredoo Hutchison / IOH)
blok 2: AXIS
blok 3: AXIS
blok 4: Telkomsel
blok 5: Telkomsel
blok 6: THREE
blok 7: INDOSAT
blok 8: INDOSAT
blok 9: XL/Excelcomindo Pratama (now merger with AXIS Indonesia since 2014)
blok 10: XL
blok: 11 Telkomsel
blok 12: XL
Various interests are piled up in terms of the cellular telecommunications business in Indonesia, some of which are under the radar of the media, not sniffed by the media. Amazed that in the APEC 2013 event where Indonesia held chairmanship at the moment, and even the president susilo celebrated specifically for Putin, various Russian businessmen directed Putin to increase investment in Indonesia.
Leaders of the Asia-Pacific Economic Cooperation (APEC, 2013) forum congratulated President of Russia Vladimir Putin on his 61st birthday on the sidelines of their summit in Indonesia's resort island of Bali. (Former) Indonesian President Susilo Bambang Yudhoyono played a rendition of "Birthday Song" to Putin on his guitar. Other leaders joined in the singing.
Putin encouraged at least various lines, including minerals (via RusAl), cellular (MegaFon), and energy (Gazprom) to explore more concrete cooperation in Indonesia, in gratitude for president Susilo Bambang Yudhoyono's respect and friendly attitude.
Still under radar before already published-reports by the media, at least Telenor and Ooredoo had been interested since 2011 for the prospect of cellular business in Indonesia and the entire ASEAN. We already know that Telenor and Axiata have ended talks to create a telecoms joint venture with nearly 300 million customers across South Asia and Southeast Asia in a blow to the Norwegian group's growth strategy and shares, but at least Telenor still invests in Myanmar until today. Ooredoo successfully set an investment in Indonesia (Indosat - Ooredoo, and now Indosat Ooredoo Hutchison).
Then, SBY (Susilo Bambang Yudhoyono) administration (during 2011-2013), had an interest in developing Telkomsel, as the Indonesian government has a 65% share in Telkomsel (alongside 35% by Singapore’s Temasek). First, the government wants Telkomsel spectrum blocks to be next to each other or close together (contiguous), while encouraging block arrangements for other cellular business players in Indonesia. Not like during 2010-2015 (*Blok 4, Blok 5, then Blok 11, owned by Telkomsel).
Two, because the spectrum block of cellular is a rare-limited resource, SBY (Susilo Bambang Yudhoyono) administration wants to simplify the player of cellular industries, not too many players. Telkom-3 is an Indonesian communications satellite which failed to reach its target orbit due to a launch failure on 6 August 2012. It was built by ISS Reshetnev for Indonesian telecommunications provider PT Telekomunikasi Indonesia. After the Garuda-1 satellite was retired following multiple malfunctions, the Defense Ministry took over control of the orbital slot from the Communications and Information Ministry. So, cellular businesses in Indonesia actually use very limited or rare resources.
But other players want a fairness policy by the government, to (also) get contiguous blocks, in aims to more freely choose and be flexible in improving cellular technology (with contiguous blocks). At least I have an idea-proposal, during my tenure have a client XL/Excelcomindo Pratama, I share to Managing Partner:
XL/Excelcomindo Pratama may ask AXIS for an idea/potential merger. XL has 3 blocks, but only 2 blocks contiguous (block 9 & block 10), AXIS has 2 blocks and is contiguous (block 2 and 3).
Advising wait and see / waiting for an Indonesian government move also another competitor move, and the domino effect that would follow it. I assume that the SBY administration pushes every player to agree refarmed of spectrum. I was set a scenario (without merger and if merger):
a]
Change of block position, between Hutchison (block 1) and Telkomsel (block 11)
b]
Change of block position, between Hutchison (block 6) and XL (block 12)
With a and b steps, Hutchison will have 2 contiguous blocks, in Block 11 and Block 12 as well.
c]
Change the entire AXIS’ Block (2 and 3) with Telkomsel (4 and 5), and INDOSAT (7 & 8) simultaneously.
So Telkomsel will have 3 contiguous blocks, 1-2-3.
Indosat will have 2 contiguous blocks, 4-5
AXIS will have 2 contiguous blocks, 7-8
d]
because XL (in this scenario) will have Block 6, and also 2 contiguous blocks (9-10), the (idea) merger XL and Axiata will create 5 contiguous blocks (6-7-8-9-10)
result of my scenario, if 100% exact happens (*and of course, in reality, not happens):
blok 1: TELKOMSEL
blok 2: TELKOMSEL
blok 3: TELKOMSEL
blok 4: INDOSAT
blok 5: INDOSAT
blok 6: XL (if merger with axis, this block owned by: XL-AXIATA)
blok 7: AXIS (if merger: XL-AXIATA)
blok 8: AXIS (if merger: XL-AXIATA)
blok 9: XL (if merger: XL-AXIATA)
blok 10: XL (if merger: XL-AXIATA)
blok: 11 Hutchison
blok 12: Hutchison
Government will be happy. (every) Players will be happy. Of course, this situation in reality is not like this because of conflict of interest and developing business, dynamic situations in the telco market in Indonesia.
XL finally completed the acquisition of AXIS with a transaction value of 865 million USD or 9.86 trillion IDR (March 2014). The Conditional Sale and Purchase Agreement was signed and XL became the majority shareholder in Axis.
Hopefully not wrong in counting, but between 2013-2023, at least 5x times the refarmed spectrum. According to Ministerial Regulation Number 76 of 2023 (Keputusan Menteri Komunikasi dan Informatika Nomor 76 Tahun 2023), published February 19th 2023 (7 months ago), the result of contiguous block:
Indosat Ooredoo Hutchison: Block 1-5 (5 blocks)
XL Axiata: Block 6 (1 block)
Sinar Mas: Block 7-8 (2 blocks)
Telkomsel: Block 9-12 (4 blocks).
The idea since SBY administration for (1) simplify - few numbers of players and (2) contiguous player just happens after long-patience 10 years work, under 2 Presidents (Susilo Bambang Yudhoyono and Joko Widodo) and 4 ministers (Tifatul Sembiring, Djoko Suyanto as Intermi Minister during estafet of regime from SBY to Jokowi, Rudiantara, and Johnny Gerard Plate —- months ago arrested by Indonesia Attorney General).
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