To circumvent government restrictions, the Tsai family, the majority shareholder of Taiwan Mobile Co (台灣大哥大), yesterday said it planned to resume a suspended bid to acquire Taiwan’s biggest cable system operator Kbro Co (凱擘) from private equity fund Carlyle Group by forming an investment firm of its own.
The latest development came after efforts of the nation’s No. 2 telecom operator to expand its cable TV business through the acquisition were prevented by rules saying that government agencies are barred from investing in any media firms.
If Taiwan Mobile’s proposal to buy Kbro was approved under current conditions, the Taipei City Government would be indirectly involved in the cable TV business as it holds a 15 percent stake in Fubon Financial Holding Co (富邦金控), the parent company of Taiwan Mobile.
“We have ended talks with Carlyle because of the restrictions,” Taiwan Mobile spokesperson Rosie Yu (俞若奚) said by phone. “The Tsai family is taking over now.”
Making its first move, the Tsai family has inked an agreement with Carlyle to purchase Kbro for NT$68 billion (US$2.12 billion) including absorbing the cable TV system operator’s NT$20 billion debt through an investment company founded by the family, the Chinese-language newspaper Economic Daily News reported yesterday.
“This is the direction we are studying with Carlyle ... We are not 100 percent sure about this deal yet,” Taiwan Mobile vice chairman Daniel Tsai (蔡明忠) told reporters on the sideline of a press conference for Taipei Fubon Commercial Bank (台北富邦銀行). Tsai doubles as chairman of Fubon Financial.
Taiwan Mobile inked a contract with Carlyle in September last year to buy 100 percent of Kbro’s shares for NT$52.8 billion, including absorbing its NT$20 billion in debt, in a cash and share-swap deal. The deal grounded to a halt after the contract expired late last month.
Over the past year, Taiwan Mobile has been working hard with the US private equity fund to find alternative options to complete the acquisition, but no breakthrough could be made because of an “outdated” law, Tsai said.
The Cable Television Act (有線電視法), enacted in 2003, originally aimed to prevent political and government entities from controlling media businesses, but now it has become an obstacle for the nation’s industries to achieve digital convergence between high-speed Internet access, television and telecoms, known as “triple play,” Tsai said.
The National Communications Commission has proposed the Cabinet allow the government to indirectly own as much as 10 percent of media companies. The plan still requires legislative approval.
ADDITIONAL REPORTING BY TED YANG
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