Moody’s Investors Service predicted the business created from a combination of Indosat Ooredoo with Hutchison 3 Indonesia would struggle to maintain market share over the next 12 months, while also being cautious on margins.

In a research note, the company predicted Indosat Ooredoo Hutchison’s margins would be impacted by high integration costs over the next two years, meaning any improvement is unlikely until 2024 at the earliest. Moody’s expects market share to be impacted by a gradual loss in shared subscribers.

The combination received regulatory clearance earlier this month.

But Stephanie Cheong, a Moody’s assistant VP, stated the operator will benefit from larger scale, improved market position and an increase in spectrum holdings, which will “enhance its network quality and coverage”.

Moody’s also highlighted cost-saving opportunities involving duplicate infrastructure, and rationalisation of sales and distribution channels. The ratings agency predicts the capex ratio to remain high at 35 per cent to 40 per cent over the next two years.

Longer term, Moody’s expects Indosat Ooredoo Hutchison to consolidate its position as the country’s second-largest telecom company, highlighting combined revenue of IDR44 trillion ($3.1 billion) in the 12 months to end-September 2021.