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.
The Ministry of the Interior (MOI) is to tighten rules for candidates running for public office, requiring them to declare that they do not hold a Chinese household registration or passport, and that they possess no other foreign citizenship. The requirement was set out in a draft amendment to the Enforcement Rules of the Public Officials Election and Recall Act (公職人員選舉罷免法 ) released by the ministry on Thursday. Under the proposal, candidates would need to make the declaration when submitting their registration forms, which would be published in the official election bulletin. The move follows the removal of several elected officials who were
FOUR DESIGNATED AREAS: Notices were issued for live-fire exercises in waters south and northwest of Penghu, northeast of Keelung and west of Kaohsiung, they said The military is planning three major annual exercises across the army, navy and air force this month, with the navy’s “Hai Chiang” (海強, “Sea Strong”) drills running from today through Friday, the Ministry of National Defense said yesterday. The Hai Chiang exercise, which is to take place in waters surrounding Taiwan, would feature P-3C Orion maritime patrol aircraft and S-70C anti-submarine helicopters, the ministry said, adding that the drills aim to bolster the nation’s offshore defensive capabilities. China has intensified military and psychological pressure against Taiwan, repeatedly sending warplanes and vessels into areas near the nation’s air defense identification zone and across
FORCED LABOR: A US court listed three Taiwanese and nine firms based in Taiwan in its indictment, with eight of the companies registered at the same address Nine companies registered in Taiwan, as well as three Taiwanese, on Tuesday were named by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) as Specially Designated Nationals (SDNs) as a result of a US federal court indictment. The indictment unsealed at the federal court in Brooklyn, New York, said that Chen Zhi (陳志), a dual Cambodian-British national, is being indicted for fraud conspiracy, money laundering and overseeing Prince Holding Group’s forced-labor scam camps in Cambodia. At its peak, the company allegedly made US$30 million per day, court documents showed. The US government has seized Chen’s noncustodial wallet, which contains
SENATE RECOMMENDATION: The National Defense Authorization Act encourages the US secretary of defense to invite Taiwan’s navy to participate in the exercises in Hawaii The US Senate on Thursday last week passed the National Defense Authorization Act (NDAA) for Fiscal Year 2026, which strongly encourages the US secretary of defense to invite Taiwan’s naval forces to participate in the Rim of the Pacific (RIMPAC) exercise, as well as allocating military aid of US$1 billion for Taiwan. The bill, which authorizes appropriations for the military activities of the US Department of Defense, military construction and other purposes, passed with 77 votes in support and 20 against. While the NDAA authorizes about US$925 billion of defense spending, the Central News Agency yesterday reported that an aide of US
RSS