Thu, Jul 23, 2009 - Page 11 News List

FarEasTone eyes merger next year


Far EasTone Telecommunications Co Ltd (遠傳電信), the nation’s third-largest telecom operator, may merge its fixed-line affiliate as early as next year, a company executive told a press briefing yesterday.

The move will help boost Far EasTone’s revenues and further enhance its cost efficiency to cope with the nation’s highly competitive telecom market, Far EasTone vice chairman Jan Nilsson said.

It was a much-anticipated answer to the long-term question about the timeline for the merger between Far EasTone and fixed-line company New Century InfoComm Tech Co (NCIC, 新世紀資通) since the mobile carrier increased its holding of NCIC to a controlling stake of 26.56 percent in 2007.

Far EasTone made NT$62.52 billion on a consolidated basis last year.

Far EasTone and NCIC have worked together in marketing telecom services and building telecom networks via the virtual telecom group set up last year under the Far Eastern Group (遠東集團).

Nilsson said Far EasTone has been concerned that the merger could have a negative impact on shareholder’s interest due to NCIC’s weak financial performance and NCIC shareholders’ preference for a merger via share swaps.

But, worries seemed to have eased recently as NCIC has significantly improved its operations. After posting NT$2 billion in losses for last year, NCIC swung into profit from March, Far EasTone said.

The issue is now how to make proper payment to NCIC shareholders, Nilsson said.

“In my judgement, it [the merger] will happen next year,” he said.

The merger between Far EasTone and NCIC is one of Far EasTone’s major strategies for the next three years, Nilsson said.

Instead of diversifying into real estate, or cable TV businesses as local rivals have, Far EasTone would continue focusing on its core telecom business, but aims to transform itself into a telecom service provider from a bandwidth provider, he said.

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