The government's sale of a 1 percent stake in Chunghwa Telecom Co flopped yesterday, as investors balked at the price and bought only 7.4 percent of 100 million shares on offer.
The failure follows four fizzled auctions to institutional investors and two dud sales to individual investors in the past two-and-a-half years. The sale of a 13.5 percent stake to Cathay Life Insurance Co and two other investors in December was the only time the government sold all Chunghwa shares on offer.
"The government is always pricing Chunghwa shares too high," said Wu Chiu-pi, a street noodle vender who monitors the NT$10 million of local shares he holds with a hand-held paging device. He hasn't bought any Chunghwa shares.
Chunghwa has been a tough sell because of competition in the world's densest mobile-phone market and a global slump in the phone industry.
The government, which once boasted it would sell a third of the former telephone monopoly by the end of 2000, is still stuck with about 82 percent.
Even a price discount didn't coax buyers. The government sold 6.4 million shares today for NT$51 a share, NT$1 below the market price. That brought the three-day total to 7.4 million shares sold.
"The government simply is not willing to offer a good discount to attract investors," said Simon Chao (
"Worries that people may accuse them of selling state assets too cheaply have prevented the government from being more flexible in pricing," Chao said.
Chunghwa may face lower profit next year. Net income may drop to NT$41.7 billion, said Capital Securities Corp, which managed this week's share sale.
The poor results aren't the first defeat for Chunghwa chairman Hochen Tan (賀陳旦), who took the top job in January.
In 2000, when he was vice minister of transportation and communications, Hochen helped set the price for a planned sale of Chunghwa shares in the US. He resigned from the ministry several months after the sale was shelved, saying his personality wasn't cut out for government work, local media reported at that time.
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