MHP Law Office winning Asian Legal Business Indonesia Law Award 2023
MHP Law Office win Asian Legal Business - Indonesia Law Awards 2023 in "Technology, Media and Telecommunication Law Firm of The Year" and "M&A Deal of The Year"
25 October 2023
Technology, Media and Telecommunications Law Firm of The Year
Fixed Mobile Convergence (“FMC”) Telkom - Telkomsel
>MHP Law Office has represented and advised PT Telekomunikasi Selular (“TELKOMSEL”), one of the leading telecommunications company in Indonesia, on the business spin off of IndiHome (“Transaction”), the largest fixed broadband business in Indonesia, from PT Telekomunikasi Indonesia Tbk (“TELKOM”) to TELKOMSEL.
As part of the Transaction MHP Law Office worked closely with TELKOMSEL on the legal due diligence, drafting and negotiation of the material transaction object agreements namely:
- The Wholesale Agreement (WSA), where TELKOM provides to TELKOMSEL main services among others Fiber to Home (FTTH) and internet services while also providing additional services, among others, 5G core implementation support and other services agreed upon through Future Investment mechanism. The value of WSA estimated to be IDR 18,747,341,007,230.
- Fixed Broadband Core Transition Service Agreement (TSA-1), where TELKOM provides to TELKOMSEL Fixed Broadband Core (FBC). The value of TSA-1 estimated to be IDR 495,971,226,790.
- IT System Transition Service Agreement (TSA-2), where TELKOM provides to TELKOMSEL among others, IT services and Billing and collection system operation services. The value of TSA-2 estimated to be IDR 489,264,960,646.
MHP Law Office have also assisted TELKOMSEL in entering into agreements with more than 1000 TELKOM existing vendors concering IndiHome service by way of new agreements and novation agreements. During the course of the drafting of the agreements, MHP Law Office have advised TELKOMSEL on the issues pertaining to the transfer of applications and softwares, intellectual properties, data transfer, cyber security, data privacy and protection.
As part of the FMC Project, MHP Law Office have also represented and advised TELKOMSEL on the transfer of TELKOM’s Indihome employees into TELKOMSEL and the transfer of IPTV services from TELKOM to TELKOMSEL including transfer of contracts from various content providers, both locals and overseas, by way of novation and new agreements among others IPTV contents, channels, studio productions, OTT platforms and supporting services.
All the agreements above are aimed towards giving a seamless transition of services from TELKOM to TELKOMSEL ensuring uninterrupted service for the customers of IndiHome.
Data Center Lease Agreements between one of Indonesia’s Leading Data Center Company and Multinational Hyperscalers
MHP Law Office have represented and advised one of Indonesia’s leading data center company (Company) in entering into a lease agreement for one of the recently developed largest data center in Indonesia with a multinational technology corporation. We worked closely with the data center company on the drafting and negotiating of the lease agreement detailing the technical terms, cybersecurity, data privacy and protection aspect of the data center and the tenants. The data center has supporting facilities with an international scale, carrier neutral and multi-services for other network providers which aims to house tenants ranging from multinational corporations to national corporations.
The MHP Law Office team that advised the Company on this matter was led by Muhtar Ali and was supported by associates Dzulyan Wishardy Alwi, Odelia Quena, Rama Abrarzati, and Lalita Amalia.
M&A Deal of The Year
Fixed Mobile Convergence (“FMC”) Telkom – Telkomsel
MHP Law Office have represented PT Telekomunikasi Selular (TELKOMSEL) on the legal due diligence, drafting and negotiating the Material Transaction Object Agreements namely:
- The Wholesale Agreement (WSA) with the value of IDR 18,747,341,007,230
- Fixed Broadband Core Transition Service Agreement (TSA-1) with the value of IDR 495,971,226,790
- IT System Transition Service Agreement (TSA-2) with the value of IDR 489,264,960,646
- agreements with more than 1000 PT Telekomunikasi Indonesia Tbk (TELKOM) existing vendors concerning IndiHome service by way of new agreements and novation agreements
- the transfer of TELKOM’s Indihome employees into TELKOMSEL. MHP Law Office have also represented TELKOMSEL on the negotiation and preparation of the Conditional Spin-Off Agreement (CSA)
TELKOM and TELKOMSEL have integrated IndiHome services, the biggest fixed broadband player Indonesia, into TELKOMSEL. This spin off and integration is in line with the Fixed Mobile Convergence (FMC) initiative of TELKOM and TELKOMSEL and has the support of TELKOM and Singapore Telecommunications Limited (SINGTEL) as TELKOMSEL's shareholders. For SINGTEL, this integration aligns with its strategic reset principles of pivoting towards higher growth businesses, while reinforcing its commitment to Indonesia.
As the consideration for the IndiHome spin off is through the issuance of new primary shares in TELKOMSEL, there would be an increase of TELKOM’s shares in TELKOMSEL, comprising TELKOM 70.4% and Singtel 29.6% upon legal completion of the spin-off. The value of IndiHome amounts to IDR 58.3 trillion (equivalent to S$5.1 billion - 50% higher than TELKOM’s equity when combined with other commercial agreements between TELKOM and TELKOMSEL).
At the time of the integration, SINGTEL has agreed to exercise its pre-emptive right to purchase another 0.5 percentage point share in this enlarged entity by subscribing for new primary shares of TELKOMSEL post- integration, for IDR 2.7 trillion (equivalent to S$236 million) in cash. This brings its effective interest in TELKOMSEL to 30.1%, meanwhile TELKOM goes to 69.9%.
With this strategy involving IndiHome and TELKOMSEL, Business to Consumers (B2C) in Telkom Group will be fully managed by TELKOMSEL, while TELKOM’s operational focus will be on Business to Business (B2B). The FMC initiative is expected to strengthen Telkom Group’s position as an integrated telco to address customers’ evolving needs and create synergies through their extensive customer network.
For this transaction, MHP Law Office, Nurhadian Kartohadiprodjo Noorcahyo Legal (NKN Legal), and Purbadi & Associates are acting as legal advisor for TELKOMSEL, and PT HSBC Sekuritas Indonesia (HSBC) acting as financial advisor for TELKOMSEL. While Mandiri Sekuritas and Goldman Sachs are acting as financial advisors to TELKOM, and Hadiputranto, Hadinoto & Partners is acting as legal advisor to TELKOM. Citi is acting as financial advisor to SINGTEL, and Hiswara Bunjamin & Tandjung is acting as legal advisor to SINGTEL.