Government plans to sell Chunghwa Telecom stake

The government plans to sell a 17 percent stake in Chunghwa Telecom Co (中華電信) by June in a move to privatize the state-run carrier, an official said yesterday.

"It would be the right time for the share sale in terms of Chunghwa Telecom's market price," Chunghwa Telecom chairman Hochen Tan (賀陳旦) said at the legislature yesterday.

If the sales can be carried through as scheduled, it would be Chunghwa Telecom's seventh share sale since October 2000.

The Ministry of Transportation and Communications, which still owns roughly 65 percent of Chunghwa Telecom after previous sales, plans to offer about 1.45 billion shares to overseas investors by issuing American Depositary Receipts (ADR), and will offer another 100 million shares at home, Chinese-language newspapers reported, citing unnamed ministry officials. The reports said the ministry plans to select underwriters for the ADR issuance this month.

After the share sale, the ministry's holding in the nation's biggest phone company will fall to below 50 percent, the threshold for the telecom operator to qualify as privatized in this country.

The government last year scrapped a plan to sell a more than 15 percent stake in Chunghwa Telecom due to strong opposition from union workers, who fear they will lose benefits available to government employees.

Chang Chia-chu (張家祝), vice minister and spokesman, declined to confirm the report as the sale still needs lawmakers' approval.

Proceeds from the offering will be about NT$100 billion, based on Chunghwa Telecom's closing price of NT$64.5 yesterday on the Taiwan Stock Exchange.

Chunghwa Telecom is seen as a safe investment due to a high yield of about 7 percent. The company said it will issue a cash dividend of NT$4.7 a share after earning NT$5.17 a share, or NT$49.9 billion, last year.