Far EasTone Telecommunications Co (遠傳電信), the nation's third largest mobile-phone service operator, announced yesterday it would spend about NT$30 billion in a cash-and-stock swap to take over smaller rival KG Telecommunications Co (和信電訊).
The two companies signed a letter of intent yesterday. Based on the agreement, for every KG Telecom share, Far EasTone will pay NT$6.864 cash and 0.46332 of its shares.
"Through our alliance, we will be able to reach a larger economy of scale and strengthen our market position," Douglas Hsu (徐旭東), chairman of Far EasTone, said at a press conference.
The acquisition will boost Far EasTone's customer base to some 7.7 million users and make it the country's second largest mobile-phone service operator, after Taiwan Cellular Corp's (台灣大哥大) 8.6 million users, but ahead of state-run Chunghwa Telecom Co's (中華電信) 7.67 million users.
"KG Telecom is delighted to be part of a big telecom player ... this enables us to be more involved in this competitive and fast-moving industry," said Leslie Koo (辜成允), chairman of KG Telecom.
The transaction leaves KG Telecom with 800 million Far EasTone shares along with NT$11.9 billion in cash.
KG Telecom, along with its well-known i-mode service, is expected to be absorbed into Far EasTone's operations.
"Basically the new company will still operate as Far EasTone, and KG Telecom will become a part or a brand under the company," Hsu said.
Hsu said it may take at least one month for both parties to discuss future operations and management details.
According to a bank official involved in the merger deal, KG Telecom will control 23 percent of Far EasTone's shares and retain several seats on the board.
Koo will become one of Far EasTone's board members and "play a very important role in the new company," said Ronald Song (宋雲峰), an executive of ABN Amro Holdings NV, which advises KG Telecom.
The proposed merger is expected to improve Far EasTone's competitive edge for the coming high-speed mobile Internet era.
"The move will help us to successfully migrate to third-generation [3G] mobile services," Hsu said.
A telecom analyst said a larger customer base can lower an operator's average cost in setting up 3G networks and the merger is on the right track, as the local mobile-service market is nearly saturated.
"Severe competition has left second-tier players no room to expand or to profit," said Nathan Lin (林宗賢), an analyst at SinoPac Securities Corp (建華證券).
In a bid to get a foothold in the 3G market, it is necessary to have a strong customer base, he said.
WAITING GAME: The US has so far only offered a ‘best rate tariff,’ which officials assume is about 15 percent, the same as Japan, a person familiar with the matter said Taiwan and the US have completed “technical consultations” regarding tariffs and a finalized rate is expected to be released soon, Executive Yuan spokeswoman Michelle Lee (李慧芝) told a news conference yesterday, as a 90-day pause on US President Donald Trump’s “reciprocal” tariffs is set to expire today. The two countries have reached a “certain degree of consensus” on issues such as tariffs, nontariff trade barriers, trade facilitation, supply chain resilience and economic security, Lee said. They also discussed opportunities for cooperation, investment and procurement, she said. A joint statement is still being negotiated and would be released once the US government has made
NEW GEAR: On top of the new Tien Kung IV air defense missiles, the military is expected to place orders for a new combat vehicle next year for delivery in 2028 Mass production of Tien Kung IV (Sky Bow IV) missiles is expected to start next year, with plans to order 122 pods, the Ministry of National Defense’s (MND) latest list of regulated military material showed. The document said that the armed forces would obtain 46 pods of the air defense missiles next year and 76 pods the year after that. The Tien Kung IV is designed to intercept cruise missiles and ballistic missiles to an altitude of 70km, compared with the 60km maximum altitude achieved by the Missile Segment Enhancement variant of PAC-3 systems. A defense source said yesterday that the number of
Taiwanese exports to the US are to be subject to a 20 percent tariff starting on Thursday next week, according to an executive order signed by US President Donald Trump yesterday. The 20 percent levy was the same as the tariffs imposed on Vietnam, Sri Lanka and Bangladesh by Trump. It was higher than the tariffs imposed on Japan, South Korea and the EU (15 percent), as well as those on the Philippines (19 percent). A Taiwan official with knowledge of the matter said it is a "phased" tariff rate, and negotiations would continue. "Once negotiations conclude, Taiwan will obtain a better
FLOOD RECOVERY: “Post-Typhoon Danas reconstruction special act” is expected to be approved on Thursday, the premier said, adding the flood control in affected areas would be prioritized About 200cm of rainfall fell in parts of southern Taiwan from Monday last week to 9am yesterday, the Central Weather Administration (CWA) said. Kaohsiung’s Taoyuan District (桃源) saw total rainfall of 2,205mm, while Pingtung County’s Sandimen Township (三地門) had 2,060.5mm and Tainan’s Nanhua District (南化) 1,833mm, according to CWA data. Meanwhile, Alishan (阿里山) in Chiayi County saw 1,688mm of accumulated rain and Yunlin County’s Caoling (草嶺) had 1,025mm. The Pingtung County Government said that 831 local residents have been pre-emptively evacuated from mountainous areas. A total of 576 are staying with relatives in low-lying areas, while the other 255 are in shelters. CWA forecaster
RSS