Entering E-Commerce, XL Axiata Collaborates with SK Planet Korea to Form a Joint Venture

XL Axiata (XL) immediately enter the e-commerce market after announcing its partnership with SK Planet from South Korea to form a joint venture company (JV). The paid-in capital for the JV is $18.3 million (close to 180 billion), of which each company has a 50% stake. SK Planet is a subsidiary of SK Telecom, a Korean telecommunications company, which is engaged in providing digital services. Previously, SK Planet also collaborated with Telkom to develop MelOn as a music service solution.

As quoted from IndoTelko, President Director of XL Axiata Hasnul Suhaimi said, "We want to try to work on e-commerce by cooperating with mature partners. Later e-commerce in the Digital Services directorate will be specifically managed by this new joint venture."

Meanwhile, Murni Nurdin, XL's Corporate Secretary, was quoted as saying: from Indonesian Business said, "In general, the purpose of forming this joint venture is to increase the market share of digital services, generate new revenue and strengthen the XL brand in the Indonesian telecommunications industry."

It is not yet clear about the products and target market that this new e-commerce company wants to target, whether it sells directly to consumers or is a bridge for XL's existing services. We are still gathering information about this, but it is hoped that the JV company will be able to operate this year. The fact that XL even needs to create a JV company means that there is a serious effort from the operator whose ownership is held by the Malaysian Axiata Group to explore this new business.

SK Planet itself in South Korea has a variety of digital products on offer, such as app stores, social networking services and Internet portals.

Of course, this step is a drastic step taken by XL as a telecommunications company to expand its market. Given the wide open market share based on digital, coupled with the very high penetration of cellular services in Indonesia as a mobile-first country, it is not surprising that XL sees an opportunity to expand its revenue.

However, we can't deny the fact that Telkom has tried it through Plasa/Metra and so far it hasn't shown satisfactory results. Instead, it's now pivoting and focusing on the media industry by collaborating with MSN.

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