Hong Kong's CK Hutchison and Qatar's Ooredoo have agreed to merge their Indonesian telecom units in a $6 billion deal, the two companies said on Thursday.

The merged entity will be the second largest mobile telecoms company in the country with an annual revenue of about $3 billion.

The deal will help the combined company to better compete against state-backed Telkomsel, which controls around half of the cellular market in the world's fourth most populous country.

"The combined company will have the scale, financial strength, and expertise to compete more effectively," the joint statement said.

The two companies said the deal will realise annual run rate pre-tax synergies of approximately $300-$400 million over three to five years.

The deal took several months to be finalised after Ooredoo and CK Hutchison Holdings had first announced in December that they were exploring a deal to merge their Indonesian units.

CK Hutchison will acquire a 50% shareholding in Ooredoo Asia by exchanging its 21.8% stake in Indosat Ooredoo Hutchison for a 33.3% stake in Ooredoo Asia.

It will also acquire an additional 16.7% stake from Ooredoo Group for a cash consideration of $387 million.

The parties will each own 50% of Ooredoo Asia, to be renamed Ooredoo Hutchison Asia, which will retain a controlling 65.6% ownership stake in the merged company.

It will remain listed on the Indonesian Stock Exchange, with the government of Indonesia retaining a 9.6% stake, PT Tiga Telekomunikasi Indonesia holding a 10.8% stake and other public shareholders holding approximately 14%.

The merged company will be well placed to deliver a higher return on investment for all shareholders and build on the outstanding growth momentum already achieved by Indosat Ooredoo, said Ooredoo Group's MD Aziz Aluthman Fakhroo in a statement.

Analysts say that a merger between Ooredoo and Hutchison will, however, leave a question mark for Malaysian telco Axiata Group's Indonesian unit.

(Reporting by Nikhil Kurian Nainan in Bengaluru and Saeed Azhar in Dubai; editing by David Evans) ((NikhilKurian.Nainan@thomsonreuters.com; Twitter: @NikhilKurianN))