Chunghwa Telecom buys into animation company

Chunghwa Telecom Co (中華電信) has acquired a major stake in a local online animation company as part of renewed efforts to strengthen its wireless services via acquisitions, the nation's biggest phone company said yesterday.

Chunghwa Telecom spent NT$20 million (US$605,000) on acquiring a 30-percent stake in Spring House Entertainment Inc (春水堂科技), which created the popular animated character A-Kuei (阿貴), according to a filing to the Taiwan Stock Exchange.

"We had an eye on their strong abilities in creating digital content. A-Kuei has gained huge popularity since the creation of the character," Chunghwa Telecom spokesman Hank Wang (王漢朝) said.

The telecom operator will offer A-Kuei animations for its mobile subscribers to download from their handsets, he said.

The unlisted Spring House Entertainment, which was established in 2000, holds capital amounting to NT$67.2 million.

The company says on its Web site that it aims to use the Walt Disney Company as its model to build an animation kingdom.

"This small expenditure will not affect our cash position," Wang said, adding that Chunghwa Telecom was cash-flush.

The company has about NT$34.67 billion in free cash as of the second quarter, up 21 percent from a year ago, he said.

Chunghwa Telecom shares dropped 0.36 percent to NT$55.8 yesterday after announcing the acquisition of Spring House, slightly underperforming against the broader market's 0.32-percent decline.

The company on Wednesday said its sales rose to NT$137.49 billion in the first nine months of the year, up 0.42 percent from the previous year. For last month alone, sales declined to NT$15.69 billion, compared with NT$15.99 billion in the same month last year. The sales figure for the first three quarters reached 74.64 percent of the company's annual target.

If the cooperation with Spring House works well, Chunghwa Telecom "may invest more," company chairman Hochen Tan (賀陳旦) told reporters yesterday.

He said that Chunghwa Telecom would keep looking for good investment targets.

"We will not rule out any possibility of cooperation with other Web-based firms in sharing [contents]," he said in response to a question about whether Chunghwa Telecom would also consider buying a share in Taiwan's top picture sharing and blog service portal, Wretch (無名小站).

He added that his company was considering a strategic alliance with wireless equipment and infrastructure supplier Q-ware Systems & Services Corp (安源資訊).

"We are approaching Q-ware through different means," Hochen said.

Chunghwa Telecom offers wireless connections at some 1,000 hotspots around the nation.

Q-ware, which is 75-percent owned by the nation's biggest food chain, Uni-President Group (統一集團), was hired by the Taipei City Government to build and operate a "Wifly" wireless network in the city.

Q-ware yesterday said that it had signed a non-disclosure agreement with a local telecommunications company to buy new shares it scheduled to offer by the end of the year. After the sale, Q-ware hoped to boost its capital to more than NT$1 billion from the current NT$840 million.