China Mobile confident Taiwan deal will succeed
Updated: 2009-05-20 07:20
By Joey Kwok(HK Edition)
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HONG KONG: China Mobile, the world's largest wireless carrier in terms of user number, yesterday expressed optimism in completing its proposed NT$17.8 billion ($542 million) investment in Taiwan's Far EasTone Telecommunications Co.
China Mobile Chairman Wang Jianzhou said the 12 percent stake China Mobile hopes to acquire in Far EasTone is a strategic investment and will bring a positive impact and business synergy to customers and companies on both sides of the Taiwan Straits.
"China Mobile won't participate in the daily operation of Far EasTone, and we won't seek a controlling stake in the company. The deal is only aimed at expanding economic cooperation across the Straits, as well as to enhance benefits to shareholders," Wang said on the sidelines of the company's annual general meeting in Hong Kong yesterday.
In April, China Mobile announced it would pay NT$40 a share for the purchase of a 12 percent stake in Far EasTone, the third largest mobile telecom company in Taiwan.
With its proposed investment, China Mobile stands to earn the distinction of being the first mainland company to invest on the Island in six decades.
The proposed deal is the company's second stake purchase outside the mainland. In 2006, China Mobile took over Hong Kong wireless carrier China Resources Peoples Telephone. Meanwhile, its parent China Mobile Communications Group Corp bought Paktel Limited in 2007.
Wang said the investment has been approved by the board of directors of both companies and it is now awaiting approval of Far EasTone's shareholders before the deal is reported to the monitoring bodies on both sides of the Straits.
Analysts said the deal - if it pushes through - will give a big boost to Far EasTone, while also encouraging other mainland companies to invest in Taiwan.
"The investment will lend a more significant help to Far EasTone as it may help the company develop its third-generation network," said Alex Lee, a telecom analyst at Taifook Securities.
The second-generation mobile networks of China Mobile and Far EasTone are both based on the GSM standard, but their next-generation networks are different from each other. China Mobile is now using the homegrown TD-SCDMA standard, which was approved by the central government in January.
Lee also expects more mainland companies to show interest in buying equity stakes in Taiwanese companies, especially electronics and telecom firms.
Shares in China Mobile advanced 2.56 percent or HK$1.85 to close at HK$74.15 in Hong Kong yesterday, moving in line with the benchmark Hang Seng Index, which finished up 3.06 percent, or 521.12 points, at 17,544.03.
(HK Edition 05/20/2009 page16)