Grab Holdings Ltd.'s ambitious multi-billion dollar acquisition of GoTo Group has encountered a significant obstacle.
Negotiations have stalled due to Indonesian wireless carrier Telkomsel's approximately 2% stake in GoTo, according to sources familiar with the matter. The carrier, which is majority-owned by state-controlled PT Telkom Indonesia, has signaled its unwillingness to sell at valuations close to current levels, as its initial investment was made at a substantially higher price. Telkomsel has raised concerns about potential losses involving state capital—a matter punishable under Indonesian law, said the people, who requested anonymity because the discussions are private.
Although Telkomsel could opt to reject any takeover offer from Grab and retain its stake, it is currently leveraging the potential bid to negotiate a more favorable price for itself. Meanwhile, Singapore-based Grab is keen to secure the support of all Indonesian stakeholders for any takeover proposal, as it would require government approval to proceed with the deal.
The Telkomsel issue represents the latest challenge in Grab's multi-year endeavor to merge with GoTo, the regional leader in ride-hailing and delivery. Previous delays in discussions have stemmed from potential regulatory opposition and valuation disagreements—yet Grab continues to pursue a deal that would expand its market share and ease pricing pressures.
Telkomsel, established as a joint venture between Telkom and Singapore Telecommunications Ltd., invested $300 million in 2021 into what would later become GoTo. This followed a $150 million convertible bond investment made the previous year. A sale at GoTo's current price levels would result in a loss amounting to hundreds of millions of dollars, the sources indicated.
Negotiations remain ongoing, and a separate arrangement to buy out Telkomsel is under discussion, though no final agreement has been reached, the people said.
Representatives for Grab and GoTo declined to comment. A Telkomsel spokesperson stated that the company does not comment on market speculation, rumors, or ongoing discussions involving third parties.
GoTo currently holds a market capitalization of approximately $4.2 billion, while New York-traded Grab is valued at $18.5 billion. A takeover has yet to materialize partly due to antitrust concerns that would likely arise from merging the two dominant ride-hailing providers in the region. Indonesian politicians have also expressed worries about potential fare increases, job cuts, and the loss of a national tech champion to foreign ownership.
Meanwhile, a newly drafted decree to regulate Indonesia's ride-hailing industry could impact company profits and margins, potentially undermining the rationale and valuation of any takeover. Discussions regarding commission rates for drivers and insurance coverage for accidents and fatalities have not been finalized, according to Indonesia’s Minister of State Prasetyo Hadi.
Indonesian President Prabowo Subianto faces mounting pressure to address drivers' demands for improved compensation and working conditions, as escalating protests nationwide highlight the growing political influence of the sector. Millions of car and motorcycle taxi drivers in Indonesia endure low pay, minimal insurance coverage, and growing frustration with the government, which they blame for failing to provide sufficient secure and well-paying jobs for the country's expanding workforce.
Grab, which is backed by Uber Technologies Inc., would solidify its position as Southeast Asia's leading ride-hailing and food-delivery company through the acquisition of GoTo. Last February, sources indicated that Grab was considering a valuation exceeding $7 billion for GoTo, with one proposal involving an all-stock purchase at around 100 rupiah per share. However, that valuation has since been adjusted, one source noted, given GoTo's stock price has declined—falling roughly 30% over the past twelve months.
Both Grab and GoTo have experienced a sharp slowdown in growth from the triple-digit rates of previous years, as they shift from aggressive expansion to a greater focus on profitability. Yet their margins remain narrow, as persistent competition continues to suppress prices.