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Indonesian iPhone Retailer Surges as It Nears Partnership With Juul

Tassia Sipahutar

(Bloomberg) -- Shares of PT Erajaya Swasembada, an Indonesian distributor of Apple Inc.’s iPhones and Samsung Electronics Co.’s smartphones, surged the most in more than a year after the company said it was close to a tie-up with electronic cigarette manufacturer Juul Labs Inc.

Erajaya will soon announce details of the partnership with Juul, Budiarto Halim, president director, said by phone on Monday. “I’m currently bound by a non-disclosure agreement,” he said.

Juul has signed an exclusive distribution deal with one of Erajaya’s units and will begin to retail e-cigarettes in greater Jakarta area, Java and Bali from the end of this month, Citigroup Inc. said in a report, without saying where it got the information. In the launch stage, the product will consist of Juul basic kit, charger and refill kits, analysts Vivi Lie and Ferry Wong wrote in the report.

Juul’s device will have a one-year warranty and the roll-out will be supported by marketing campaigns on television, digital, billboards and print media, Citi said. Still, its impact on combustible cigarette market will be relatively limited and it is more likely Juul will attract vape users and non-smokers in urban areas, it said.

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Indonesia is one of the world’s largest markets for cigarettes and known for a variety of clove cigarettes it produces. The market is dominated by cigarette makers PT Hanjaya Mandala Sampoerna, a Philip Morris International Inc. unit, and PT Gudang Garam.

Erajaya’s shares jumped 19%, the most since April 30, 2018, while its Indonesian counterpart PT Hanjaya Mandala Sampoerna fell 1.5%. The nation’s benchmark index Jakarta Composite Index closed 0.4% lower.

(Updates share moves in final paragraph.)

--With assistance from Rieka Rahadiana.

To contact the reporter on this story: Tassia Sipahutar in Jakarta at ssipahutar@bloomberg.net

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Thomas Kutty Abraham

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.