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Chunghwa stake sale flops as lone bidder disqualified

Taiwan said it will schedule another auction and lower the price, after disqualifying the sole bid it received in a NT$28 billion (US$824 million) block sale of Chunghwa Telecom Co (中華電信) shares.

It was the government's third straight flop trying to sell a stake in the nation's largest phone company. "It's like selling a house," Chang Chia-juch (張家祝), vice communications minister, told a press briefing. "You have to negotiate several times with several bidders before you can possibly sell the house."

The government, which still owns almost 95 percent of Chunghwa and needs money to plug a NT$327 billion budget deficit, declined to identify the bidder, whom it described last week only as a foreign company. It said a new auction may be announced as early as Friday.

"We may adjust our price, due to the recent fluctuation in the stock market," said Wang Ting-chun (王庭俊), a section chief at the ministry.

The failure was expected by analysts, who questioned the government's claim that it had to delay announcing the results of last Thursday's auction while it checked the credentials of the mystery bidder.

"I'm not surprised," said Gregory Lue, who helps manage NT$4 billion in stocks at Taiwan International Investment Management Co (金鼎投信). "They probably had some disagreement on the pricing."

The government was offering 550 million shares, or a 5.7 percent stake, in Chunghwa. "The bidder's documents were inconsistent with our format," Wang said. "Therefore, we disqualified the bidder."

The fizzled sale may turn up the heat on Chunghwa Chairman Mao Chi-kuo (毛治國), a former vice minister of communications appointed to head Chunghwa two years ago, in an effort to shed the company's image as a lumbering government bureaucracy.

Under Mao's tenure, Chunghwa sold 2 percent of shares offered in its initial public sale in September 2000 and a third of shares offered in a second sale in June last year.

Chang told reporters the Chunghwa board will hold a meeting on Monday. "They will decide whether to keep the chairman based on his performance," he said.

The government isn't worried about the global slump in telecommunications shares, said Tsai Tuei (蔡堆), another vice minister.

He said Chunghwa, unlike many of its counterparts in the US and Europe, is profitable and "virtually without debt." The government plans to sell two-thirds of the company, Tsai said, without giving any time frame.
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