Jakarta. Malaysian multinational telecommunications conglomerate Axiata has agreed on Tuesday to buy a controlling interest in one of Indonesia's biggest cable TV operators and fixed broadband internet provider, Link Net, for about $604 million, paving the way for expansion in the archipelago's untapped fixed broadband market.   

Link Net's two largest shareholders, Asia Link Dewa and First Media, a subsidiary of Indonesian diversified conglomerate Lippo Group, said in a statement they had signed a share purchase agreement to sell their combined 66.03 percent shares in the company to Axiata Investments and its sister company XL Axiata, a local mobile operator. 

Asia Link and First Media would sell 1.82 billion shares in Link Net at Rp 4,800 apiece, or 10 percent above the fixed broadband operator closing price on the Jakarta bourse on Thursday, for a total of Rp 8.72 trillion ($606 million). 

Link Net said the acquisition was subject to several conditions set out in the agreement and regulations.

According to the Financial Services Authority's rule, any party seizing control of an Indonesian public company must conduct a mandatory takeover offer to acquire the remaining voting shares of the company. 

"The successful completion of the transaction will provide significant opportunities for Link Net together with our new partners, to provide converged fixed-line broadband and mobile service propositions to both our residential and enterprise clients," President Director and Chief Executive Officer (CEO) of Link Net Marlo Budiman, said in the statement.  

"Indonesia's high-speed broadband market remains deeply underpenetrated, and the ability to provide a wider and more comprehensive product offering is expected to contribute to future growth and benefit all our stakeholders," Marlo said. 

According to BeritaSatu Research's Indonesia Digital Infrastructure Report, Indonesia only has four fixed broadband subscriptions per 100 people, compared to 14 in the Asia Pacific region. Still, fixed broadband adoption is growing. It doubled to more than 10.7 million in 2020, from just over 5.3 million in 2016, or growing at a compounded annual growth rate of 14 percent.

"There is an opportunity for significant synergies from the sharing of backbone and transmission networks and strategic alignment on revenue enhancement and cost efficiency measures. These opportunities are enhanced by Link Net's extensive relationships with business partners and customers," he said. 

Lippo Group Executive Director John Riady said Link Net sale was part of the group's ongoing consolidation and transformation strategy to strengthen the balance and raise fresh funds for other future investments.

"We welcome the agreement. This is a step in our strategic effort for consolidation and transformation," John said.

John said Link Net recorded a healthy financial performance with zero debt and held a great prospect in Indonesia's telecommunication landscape. Still, the company needed an expansion strategy that would bring it further into the digital market in the country, which synergy with XL Axiata could provide. 

Previously, the XL Axiata Group said Link Net acquisition was in line with the development of the digital line from the XL Group and Lippo Group.

"The purpose of the takeover plan is for business development and network expansion as well as to strengthen XL and Axiata's business position in regard of providing telecommunications services to customers," Ranty Astari Rachman, XL Axiata's corporate secretary, said in a statement to the Indonesia Stock Exchange (IDX) last month.