Taiwan Cellular Corp (
According to analysts, the three new companies help create business opportunities for Taiwan Cellular needed to offset the decline in new customer sign-ups. Taiwan's mobile telecom market has already reached a saturation point with over 18 million cellular phone subscriptions in a nation of only 22 million people.
"In each case of these three companies, we're taking existing capabilities within Taiwan Cellular and spinning them off, so to speak ... so it's looking to expand the revenue base and profitability of the company," said William Newton, vice president at Taiwan Cellular.
The companies are not being spun-off for listing on the local bourse, but instead to be grown as separate firms under a Taiwan Cellular "family" of companies. The three new firms will come from TCC's call center operations, billing and information technology division and the network construction and maintenance engineering services operations.
The firm will invest NT$520 million and maintain a 65 percent stake in newly established Taiwan Tele-Services & Technologies Co (
An additional NT$325 million will be invested in Elitec Technology Co (
Finally, Taiwan Cellular will invest NT$1.5 billion and keep a 25 percent stake in Howin Technologies Co, Ltd (
The company will also firm up its position in Pacom Co (
Last year, Pacom took in revenue of NT$16.86 billion and a pretax profit of NT$1.35 billion and earnings per share of NT$16.4 on total mobile phone sales of 2.254 million handsets, through its investments in Taiwan Teleshop. The profit figure represents a 67 percent increase over the previous year.
China Securities' (
"[Taiwan Cellular] estimates that the collection rate will become increasingly worse in the future because a lot of people already own more than two SIMM cards [cell phone subscriptions]. ... About 25 percent of mobile phone users have more than two SIMM cards," said Wu.
Taiwan Cellular is also looking to list on an overseas capital market within the coming year, planning to list 330 million shares as depository receipts (DR), or stocks listed on a foreign exchange. The company did not set a specific time for the listing, saying it would depend on market conditions.
"The reason why we continue to say `DR' is we want to leave our options fully open. I think our leaning would be toward an ADR [American Depository Receipt],"said Newton.
The company plans to use the money to fund expansion of its existing mobile telecom network and invest in new technology such as the General Packet Radio Service mobile Internet system already out or in third generation (3G) network equipment.
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