Despite the possibility of creating a major rival for the telecom industry's two major players, the proposed merger on Thursday between Far EasTone Telecom-munications Co (遠傳電信) and KG Telecommunications Co (和信電訊) must overcome many obstacles, analysts said. \n"The proposed partnership will certainly help strengthen Far EasTone's market position, lower its operating costs and boost its sales," said Gary Lai (賴晴風), an analyst at Insight Pacific Investment Research (月涵證券) in Taipei. \n"But these benefits won't surface until the new company cuts redundant staff and rearranges its services," Lai said. \nFar EasTone announced on Thursday that it would spend about NT$30 billion in a cash-and-stock swap to take over smaller rival KG Telecom. \n"Currently, investors are still conservative [about buying Far EasTone shares] as they understand it may take a while for Far EasTone to profit from the merger," Lai said. \nFar EasTone now faces a challenge after the merger -- the largest in the nation's telecom industry -- in terms of restructuring, another market watcher said. \n"Management realignment and resource integration are not easy tasks for the new company," said Andy Chang (張書評), a telecom analyst at Yuanta Core Pacific Securities Corp (元大京華證券). "In addition, laying off employees is a must for the company if it wants to enhance efficiency." \nFar EasTone has 2,500 employees, while KG Telecom employs nearly 1,300 people. Chang said that surplus equipment maintenance staff, customer service representatives and administrative officials are likely to be given pink slips. \nMeanwhile, Chang said KG Telecom's well-known "i-mode" multimedia mobile data service may continue to operate while Far EasTone's "i-style" may become history, as the new company need not offer redundant services to customers. \nIn addition, "i-mode" enjoys a good global reputation, and Japan-based NTT DoCoMo remains highly interested in Taiwan's market, he said. The Japanese telecom giant owns 21 percent of KG Telecom's shares, and is expected to hold 4.8 percent of Far EasTone's shares after the merger. \nShares of Far EasTone closed at NT$0.2, or 0.8 percent to NT$22.4 on the Gre Tai Securities Market (櫃台買賣中心) yesterday.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to
The US stock market has been on a tear, yet the country’s economy is in the dumps. So why do so many people believe — undoubtedly incorrectly — that the stock market has decoupled from reality? The economy many people experience, while bleak, is local, personal and, for the most part, either not publicly traded or plays only a small part in the stock market’s moves. To explain why these personal experiences have so little effect on equity markets, we must look more closely at the market role of the weakest industry sectors. The surprising conclusion: The most visible and economically vulnerable