Taiwan Mobile Co (台灣大哥大), the nation’s second-largest telecom operator, yesterday said it would acquire a majority stake in the nation’s No. 2 cable TV system operator, Kbro Co (凱擘), by purchasing the Carlyle Group’s holdings for NT$32.8 billion (US$1 billion), in an effort to boost its presence in the cable TV market.
The two companies reached the deal yesterday, which would triple Taiwan Mobile’s market share to approximately 32 percent and allow it to overtake China Network Systems Co (中嘉網路) as the nation’s biggest cable system operator.
“We are very bullish about the development of the cable TV business, including digital and interactive TV. Taiwan Mobile has a small number of cable TV subscribers. The combination with Carlyle [Kbro] will provide a better platform for digital convergence,” Taiwan Mobile chairman Richard Tsai (蔡明興) told a media briefing.
PHOTO: MAURICE TSAI, BLOOMBERG
Taiwan Mobile will have a combined 1.6 million cable TV subscribers after absorbing Kbro, which has 12 cable TV networks and about 1.1 million subscribers as of June. The country has about 4.6 million cable TV subscribers in total.
Under the agreement, Taiwan Mobile will acquire a majority stake in Kbro by issuing 589 million treasury shares and paying NT$440 million in cash to Carlyle. The offering price will be about NT$55 per share, 4.6 percent higher than Taiwan Mobile’s closing price of NT$52.50 in Taipei trading yesterday.
The two companies declined to comment on how big the majority stake represents.
Taiwan Mobile will also assume a debt of NT$24 billion from Kbro, which generates about NT$6 billion in cash flow a year.
After the transaction, Carlyle will own a 15.5 percent stake in Taiwan Mobile, making it the second-biggest shareholder of the telecom company after Tsai’s family.
The two sides expect to close the deal by the end of the year at the earliest.
Carlyle Group purchased a majority stake in Kbro, which used to be known as Eastern Multimedia Co (東森媒體科技), for NT$47.6 billion three-and-a-half years ago.
“We are committed to invest in Taiwan’s cable TV business. This is not [an] exit from Taiwan cable TV market,” said Gregory Zeluck, managing director at Carlyle.
After absorbing Kbro, Taiwan Mobile expects the cable TV business to account for a bigger portion — more than 25 percent — of its overall cash flow, compared with 8 percent now, company financial executive Rosie Yu (俞若奚) said.
Wireless business will still be the largest cash contributor, Yu said.
“This is quite a good deal. Cable TV system operators make more profits than telecom operators,” Yu said.
Citigroup said the deal would make a constructive contribution to Taiwan Mobile and upgraded its stock rating to “buy” from “sell,” with a price target of NT$60.
“We see positive earnings revision momentum hereon for this story as well,” Citigroup analyst Anand Ramachandran said in a client note yesterday.
“We see the deal driving a stronger positioning for Taiwan Mobile in the Taiwanese telecom market now,” the report said.
Taiwan Ratings Corp (中華信評) said its ratings on Taiwan Mobile would not be immediately affected by the company’s planned purchase of the cable TV assets from Carlyle, it said in a statement.
Meanwhile, the National Communications Commission (NCC) said yesterday it would conduct a review of the deal and might consider holding a hearing on the case, because it involves the integration of a telecom carrier and a cable TV service provider.
Chen Kuo-lung (陳國龍), chief of the commission’s business management department, said the NCC would investigate whether the deal violates the Cable Television Act (有線電視法), the Satellite Broadcasting Act (衛星廣播電視法) or the Telecommunications Act (電信法).
ADDITIONAL REPORTING BY SHELLEY SHAN AND KEVIN CHEN
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”