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FIC Global blames losses on subsidiary

FIC Global Inc (大眾投控), parent company of First International Telecom Corp (FITEL, 大眾電信), reported a NT$194 million (US$6 million) investment loss and an additional NT$120 million asset loss related to investments in FITEL during the first half of this year in a filing with the Taiwan Stock Exchange (TWSE) yesterday.

As of end of last month, FIC Global owned a 17.58 percent equity stake in the telecom operator, or the equivalent of NT$120 million, the statement said.

The Taipei District Court granted FITEL court protection last Thursday, while the personal handy-phone system (PHS) operator tries to work out a corporate restructuring plan. The court action was aimed at preventing creditors from seizing FITEL assets and allowing the firm access to its financial accounts to maintain its daily operations.

FITEL bounced checks worth NT$86 million earlier this month and owes more than NT$3.5 billion in bank loans, company data shows.

“This may be the perfect opportunity for big conglomerates to expand their business lines. Since FITEL is one of six operators in the country to hold the World Interoperability for Microwave Access [WiMAX] license, companies can embark on the 3.5G telecommunications revolution through FITEL,” Hau-min Chu (朱浩民), professor of money and banking at National Chengchi University said in a telephone interview yesterday.

“But before making such a strategic investment, firms need to thoroughly assess the telecom business and investigate FITEL’s balance sheet carefully to evaluate whether or not such investments are worth the risk” Chu said.

Potential mergers and acquisitions generate intense speculation. TECO Group (東元集團) denied reports by the Commercial Times (工商時報) yesterday about proposed buyouts by TECO, the Shin Kong Group (新光集團) and Japan’s No. 2 telecom carrier, KDDI Corp of Asia Pacific Telecom Group (亞太電信集團) and FITEL.

Shin Kong denied reports last Wednesday that it had an interest in taking over FITEL and it continues to stand by that denial, Shin Kong Financial spokesman Victor Hsu (許澎) said by phone yesterday.

After news stories on Sept. 4 suggested Chunghwa Telecom Co (中華電信) might invest in FITEL, following a meeting with the company’s founder Chien Ming-jen (簡明仁), the National Communications Commission (NCC) said on Sept. 5 that neither Chunghwa Telecom Co nor any other telecom could invest in FITEL with the intent to acquire a license through false or exaggerated plans of operation.

On Aug. 21, FITEL chairman Charlie Wu (吳清源) announced plans to raise NT$1 billion by the end of next month through issuance of 200 million shares of the company’s A stock. There have been no further announcements about that plan or if there had been any buyers.
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