Thu, Oct 18, 2007 - Page 12 News List

Telco aiming for stake in online music company

VALUE-ADDED SERVICE Chunghwa Telecom plans to invest in Skysoft to expand its digital offerings and boost revenues in the face of falling voice traffic

By Lisa Wang  /  STAFF REPORTER

The nation's top telecom operator Chunghwa Telecom Co (中華電信) said yesterday it was planning to buy a 30 percent stake in Taiwan's biggest online music retailer, Skysoft Co Ltd (願境網訊), to provide more diverse services for its broadband, mobile and Internet TV subscribers.

The deal would mark the latest move by Chunghwa Telecom into related spheres through acquisitions to boost value-added service subscriptions amid falling voice traffic.

Chunghwa Telecom said it would buy 44 million new shares of Skysoft, registered in Cayman Islands. It did not provide any financial details about the deal in a statement released yesterday.

The phone company would also obtain a seat on Skysoft's four-member board as part of the deal, Chunghwa Telecom said.

"The partnership with Skysoft represents Chunghwa Telecom's aggressive deployment in the digital music area in order to provide different services," Chunghwa Telecom spokesman Joseph Shieh (謝劍平) said in the statement.

Online music subscription is a fast-growing industry with annual growth rates exceeding 40 percent around the globe, Shieh said, citing a report by an unnamed industry researcher.

"The deal will help increase Chunghwa Telecom's product lineup for the value-added services," he said.

Value-added serves contribute a mere 6.5 percent to Chunghwa Telecom's mobile revenues, which is lower than rivals Taiwan Mobile Co (台灣大哥大) and Far EasTone Telecommunications Co (遠傳電信).

Chunghwa Telecom currently offers its broadband users a subscription to Skysoft's music. The new deal aims to extend the service to its mobile and Internet Protocol TV subscribers.

The telecom company has 8.58 million mobile subscribers and 330,000 Internet TV sign-ups.

With new capital injection from Chunghwa Telecom, Skysoft would boost its capital to NT$147 million from NT$103 million (US$4.5 million from US$3.2 million), according to the statement.

Collaborating with more than 140 record labels, Skysoft offers members downloads and subscriptions to more than 1.5 million titles on its Web site www.kkbox.com. The online music operator has around 200,000 members.

Skysoft is jointly owned by Taiwan's China Development Industrial Bank (中華開發工銀), Japan's financial service provider Orix Group and the US software developer Adobe Systems Inc.

Shares of Chunghwa Telecom declined 0.33 percent to NT$60.9 yesterday, compared with the Taiwan Stock Exchange index which slid 0.32 percent.

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