Ericsson AB and Siemens AG joined Nortel Networks Corp in challenging Chunghwa Telecom Co's (
Taiwan's biggest phone company put the decision on hold after protests were filed by Canada's Nortel and Sweden's Ericsson. Siemens spokeswoman Stella Jung said the German company has filed a notice that it wants to review documentation related to the bidding, though she stopped short of calling it a protest.
"We didn't feel sufficient information was provided," said Ericsson spokeswoman Emily Wang. "We took a protective action to reserve our right for full clarity."
The outcry underscores the competition in the phone-equipment industry amid a slump in telecommunications markets worldwide.
Nortel, the second-biggest supplier in North America, reported its 11th straight quarterly loss last month, and Ericsson, No. 1 in the world, had its long-term credit rating cut by Standard & Poor's earlier this month as it heads for a second straight annual loss.
Nortel earlier said it wants Chunghwa to explain the evaluation criteria used on the bids. It filed a complaint with Central of Trust of China, an intermediary in the bidding.
Chunghwa needs the equipment to begin offering Taiwan's first "third-generation" mobile, allowing users faster access to the Internet.
In related news, Chunghwa Telecom may buy back about 10 percent of outstanding shares and write off the stock after the government failed four times earlier this year to sell a 5.7 percent stake to domestic investors.
The Ministry of Transportation and Communications, which owns 95 percent of the company, may have the company sell NT$45 billion (US$1.3 billion) of debt to finance the buyback, a Chinese-language business daily reported.
Chunghwa Telecom may buy the shares from the ministry and private investors, said Shen Fufu, a company spokeswoman.
Other measures are under discussion, she said, but did not indicate what those measures are.
"This is bad news for the company as well as public shareholders," said Gary Lai, an analyst with Insightpacific in a research report.
"It will increase Chunghwa's debt ratio and may have a negative impact on its capital structure, all for the benefit of one solitary shareholder," he said
Taiwan needs to sell stakes in Chunghwa Telecom and other former monopolies to help plug an expected NT$290.6 billion budget deficit.
In October, Taiwan scrapped plans to sell a US$1.6 billion stake in Chunghwa to overseas investors. The compnay said the government may try again in the first quarter.
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