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First International fails to pay debts

First International Telecom Corp (大眾電信) yesterday said it had failed to pay NT$86 million (US$2.7 million) owed to credit banks and telecom equipment suppliers late last month, adding to the company’s heavy financial burden.

The firm offers services on Personal Handy-phone System (PHS) technology with shorter transmission range than the GSM system used by most local competitors.

“To ease financial burden, we are in talks with credit banks to give us a year-and-a-half grace period, during which we hope to repay only bank-loan interest,” company chairman Charlie Wu (吳清源) said yesterday.

The company has to pay NT$15 million in interest a month on more than NT$3.4 billion in bank loans, Wu said.

First International Telecom has bounced NT$86 million in checks to credit banks, telecom equipment suppliers and handset retailers, Wu said.

In July, the telecom operator’s board approved a plan to raise NT$1 billion by issuing 200 million preferential shares next month. The company plans to use the proceeds for daily operations and the deployment of WiMAX network.

“The share sale is on schedule,” Wu said.

The telecom operator is seeking support from its major shareholders including local conglomerate Shin Kong Group (新光集團) and electronics company FIH Global Inc (大眾投控) for the share sale. No final decision has been made yet.

Shin Kong, which holds a 3.93 percent stake in First International Telecom via subsidiary Taiwan Shin Kong Security Co (台灣新光保全), is expected to play a key role in saving the phone company as FIH posted widening losses of NT$528 million for the first half of this year from NT$92 million a year ago.

“We are discussing the possibility of subscribing to the shares,” said Arthur Chou (周國民), a spokesman for Taiwan Shin Kong Securities, a subsidiary of Shin Kong Group.

Last month, First International Telecom missed a debt payment of NT$109 million to Mega International Commercial Bank (兆豐國際商銀) and also failed to pay a combined NT$40 million in royalties and channel usage fees to the nation’s telecom regulator, the National Communications Commission.

Wu assured subscribers that mobile services would not be disrupted because of the financial problems.

“We make NT$350 million in revenue a month and that will be sufficient to keep the operation unaffected,” Wu said.

First International Telecom has 1.03 million subscribers.

The PHS wireless service provider posted losses of NT$1.23 billion for the first six months of this year, compared to NT$399 million in losses a year earlier.

Net value of the company halved to NT$3.15 per share from NT$6.21 a share.

The National Communications Commission (NCC) said yesterday that it formed an emergency taskforce last month to closely monitor First International Telecom’s operations, after it found the company had not paid its fees.

The company has not paid the telecom operating license fee and royalty fee this year, which has amounted to a total of NT$40 million.

NCC vice chairman Chen Cheng-tsan (陳正倉) said the commission hoped the firm can quickly find the funding it needs.

ADDITIONAL REPORTING BY SHELLEY SHAN
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