Chunghwa Telecom looking to purchase big stake in Senao

Chunghwa Telecom Co (中華電信) plans to buy a controlling stake in a local handset retail chain by early next month for about NT$11 billion (US$336.9 million) as part of its efforts to boost its lukewarm third-generation (3G) business.

The nation's largest phone company made the remarks after its board gave the go-ahead to the proposal to purchase an up to 32.5-percent stake, or 72.52 million shares, in Senao International Co (神腦國際).

The offer price of NT$15.1 per share represented a 46.8 percent discount on Senao's closing price yesterday of NT$28.4 on the Taiwan Stock Exchange, which marked a nearly two-and-half-year high.

In a press conference held at the stock exchange yesterday, Chunghwa Telecom spokesman Hank Wang (王漢朝) said that the company had earlier reached an agreement with Senao's major shareholders, including the company's chairman Paul Lin (林保雍), to acquire 37 million shares at NT$15.1 a share, before obtaining approval for the deal from its board earlier yesterday.

"We believe that both companies will benefit from the deal. For Chunghwa Telecom, we believe the cooperation will speed growth in the number of our 3G users due to an increase in outlets and service hours," Wang said.

Chunghwa Telecom hired Capital Securities Corp (群益證券) to represent the company in purchasing the remaining 35.5 million Senao shares from interested shareholders, Wang said.

The company said it planned to complete the purchase during the period between tomorrow and Jan. 8. Chunghwa Telecom said it planned to buy at least 70.4 million Senao shares, some 31.5 percent.

A year ago, local competitor Far EasTone Telecommunications Co (遠傳電信) purchased 55 percent of the mobile phone retailer Aroca Communication Co (全虹) for NT$1.21 billion, or NT$16.26 per share. This paved the way for the launch of Far EasTone's 3G service in the middle of last year.

Chunghwa Telecom said that Senao planned to operate around 100 outlets, up from the present 80, to exclusively sell Chunghwa Telecom's customer-made cellphones for 3G service, 2G service, broadband, and landline phone services.

The telecom operator now has more than 300 outlets nationwide, but most of them close in the afternoon and on weekends. By contrast, Senao owns around 2,000 outlets with longer opening hours.

Chunghwa Telecom previously said that it aimed to more than triple its number of 3G users to 1.5 million next year from the estimated 400,000 subscribers for this year.

Chunghwa Telecom shares rose by one percent to NT$60 on the Taiwan Stock Exchange yesterday.