KUALA LUMPUR (Sept 10): CK Hutchison Holdings Ltd, the Hong Kong conglomerate backed by tycoon Victor Li, has made a preliminary approach to Axiata Group Bhd about a potential combination of their Indonesian telecommunications operations, people with knowledge of the matter said.

CK Hutchison informally expressed interest in exploring a combination of its Indonesian wireless business with the Malaysian carrier’s local unit, PT XL Axiata, the people said. The parties haven’t yet started any substantive negotiations, according to the people, who asked not to be identified because the information is private.

Shares of XL Axiata jumped as much as 9.8% in early Tuesday trading in Jakarta, its biggest advance since Feb 18. The stock has risen about 76% this year, giving the company a market value of US$2.65 billion.

Axiata, Malaysia’s biggest wireless carrier, and Norway’s Telenor ASA last week ended talks to merge their Asian telecommunications operations in a deal that would have created a company with 300 million customers across nine countries.

The Malaysian company has been introducing strategic investors to some of its businesses and pushing into new areas as it seeks to revitalize growth. In July last year, Japan’s Sumitomo Corp invested in its mobile advertising arm, while Tokyo-based trading house Mitsui & Co bought a stake in Axiata’s digital services unit this year. Axiata’s wireless tower business has also attracted preliminary takeover interest in recent months, Bloomberg News has reported.

The exact structure of any potential deal in Indonesia hasn’t been determined, according to the people. Deliberations are at an early stage, and there’s no certainty they will lead to a transaction, the people said. A representative for CK Hutchison declined to comment.

“Axiata has created significant value uplift and attractiveness for its operations and as evidenced in the last one year,” Axiata said in a statement in response to Bloomberg queries. “We have attracted a lot of suitors to partner with us and seeking to acquire our assets including Telenor, Mitsui, Sumitomo, among others.”

Hutchison Asia Telecommunications, which houses CK Hutch’s telecom business in Indonesia, Vietnam and Sri Lanka, had about 45.7 million active customer accounts across the three countries, according to its latest interim financial report. Indonesia accounted for HK$3.7 billion (US$472 million), or 86% of Hutch Asia’s total revenue in the first six months of 2019. It’s the only Hutch Asia’s market that posted positive earnings before interest, tax, depreciation and amortization.