The government will raise the ceiling on direct foreign investment in local telecommunications companies by the end of the year, an official from the Ministry of Transportation and Communications said yesterday.
"The current 20-percent limit is scheduled to soon be liberalized," an official, who requested anonymity, said.
Chinese-language media said that the ministry has decided to raise the limit of direct foreign ownership from the current 20 percent to 49 percent. The proposal will be presented by Minister Yeh Chu-lan (葉菊蘭) at a Economic Development Advisory Conference meeting later this month.
According to the ministry, the ceiling on combined direct and indirect investment will remain at 60 percent.
Direct investors in a company have a voice on the company's board, while indirect investors do not. The government wants to limit foreign control in the telecoms sector.
"In order to prevent local ventures from being controlled by foreign players, 49 percent ownership is regarded [by the ministry] as inappropriate," the official said.
A telecom insider said several companies will benefit from the market liberalization.
"Far EasTone Telecommunications Co Ltd (遠傳電信) and KG Telecommunications Co Ltd (和信電訊) already have a large amount of foreign investment. The new measure will benefit them the most," said Alex Wu (吳興國), an analyst at China Securities Co Ltd (中信證券).
US-based AT&T owns 28.17 percent of Far EasTone while Japan's NTT DoCoMo Inc holds a 21.42 percent stake in KG Telecom.
Since Taiwan Cellular Corp (
* AT&T owns 28.17 percent of Far EasTone.
* NTT DoCoMo Inc holds a 21.42 percent stake in KG Telecom.
* Taiwan Cellular's current direct foreign ownership is nearing 20 percent.
"Taiwan Cellular's current direct foreign ownership is nearing 20 percent. This open policy will enable more foreign investors to buy stock in the company," Wu said.
Raising the foreign investment cap is a tremendous aid, Wu said, not only in terms of capital infusion, but also for technical support. This especially benefits telecoms aiming to bid for third-generation mobile telecom operator licenses.
Chinese-language media last week reported officials from the Directorate General of Telecommunications as saying that they have drawn up a draft revision of the minimum capital requirement for 3G mobile-phone service operators to NT$6 billion from NT$10 billion.
The revisions are still subject to further amendments after a public hearing tomorrow before the directorate submits the draft to the Ministry of Transportation and Communications.
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