Telkomsel Blocks Grab-GoTo Deal Over $7B Valuation Gap
State capital laws give Telkomsel veto power over Grab's $7B GoTo acquisition. How Indonesian regulations protecting state assets create deal friction for tech M&A.
Grab's proposed US$7 billion acquisition of Indonesian tech company GoTo has stalled over a 2% stake held by state-controlled wireless carrier Telkomsel, which is refusing to sell at current valuations that would crystallize hundreds of millions of dollars in losses.
The dispute highlights how state-backed investment structures and strict Indonesian laws on state capital preservation can derail major tech transactions in Southeast Asia, even when minority shareholders hold relatively small positions.
State Capital Laws Create Deal Friction
Telkomsel, a joint venture between Telkom Indonesia and Singtel, invested US$450 million in GoTo between 2020 and 2021, including a US$150 million convertible bond and US$300 million equity stake. At GoTo's current market capitalization of US$4.2 billion, selling would result in massive losses compared to the carrier's original entry price.
Mission Media
Indonesian law makes executives at state-owned enterprises criminally liable for losses linked to state capital, creating legal risks that extend beyond typical commercial considerations. This regulatory framework gives Telkomsel strong incentive to either retain its stake indefinitely or negotiate a substantially higher sale price.
Grab proposed acquiring GoTo at a valuation exceeding US$7 billion in February 2025, representing a 66% premium to current market levels. At approximately 100 rupiah per share in an all-stock transaction, this would significantly reduce Telkomsel's losses. However, GoTo's stock has fallen 30% over the past year, widening the valuation gap with Grab, which trades at an US$18.5 billion market capitalization in New York.
Regulatory and Political Hurdles Mount
Beyond the Telkomsel impasse, the merger faces significant antitrust concerns. A combined entity would control 99% of Indonesia's ride-hailing market and 85% regionally, raising regulatory red flags about competition and consumer pricing.
Grab's 2018 acquisition of Uber's Southeast Asian operations provides a cautionary precedent. That deal resulted in regulatory fines and fare increases of 15% to 20% in Singapore, demonstrating how market consolidation can trigger price hikes that attract government scrutiny.
Political opposition has emerged from concerns about losing a national tech champion to foreign ownership, potential job losses, and rising prices for consumers. More than four million Indonesian gig workers have staged protests demanding better compensation and benefits, putting pressure on President Prabowo Subianto's administration.
"Discussions about commission sizes and insurance coverage remain unfinalized," Indonesian Minister of State Prasetyo Hadi said, highlighting unresolved regulatory issues affecting the sector.
Strategic Complications for Deal Completion
Grab needs approval from all Indonesian stakeholders to secure government clearance for the acquisition, giving Telkomsel outsized leverage despite its small stake. The carrier is attempting to use this position to negotiate a higher sale price that minimizes losses.
Indonesia's sovereign wealth fund Danantara previously explored acquiring a stake in a merged entity valued at US$25 billion to ease regulatory approval, though those discussions have not progressed.
Both companies have shifted from rapid expansion strategies to profitability focus in recent years, but slim margins from competitive pricing pressures complicate the deal's strategic rationale. A new draft decree on ride-hailing industry regulations affecting commissions and insurance requirements adds further uncertainty to the transaction timeline.
The standoff demonstrates how valuation timing, state capital liability laws, and regulatory complexity create friction points that can block major tech deals in markets with significant government participation, even when commercial logic appears compelling.
Want to stay up-to-date on the stories shaping Asia's media, marketing, and comms industry? Subscribe to Mission Media for exclusive insights, campaign deep-dives, and actionable intel.
