Thu, Apr 30, 2009 - Page 1 News List

Far EasTone to sell stake to PRC firm

By Kevin Chen  /  STAFF REPORTER

Far EasTone Telecommunications Co (遠傳電信), the nation’s third-largest telecoms service provider, plans to sell a 12 percent stake to China Mobile Ltd (中國移動) for NT$17.77 billion (US$528 million), the company said in a statement yesterday. The news came as the FSC said yesterday Chinese institutional investors would be allowed to apply to invest in Taiwan’s equity market, beginning today.

Far EasTone plans to issue 444 million new shares through a ­private placement and China Mobile will subscribe to these shares by paying NT$40 per share, the Taipei-based company said.

The two companies also announced plans to form a strategic alliance, involving joint equipment purchases, the development of roaming services and technology upgrades in telecom networks.

The deal is still subject to regulatory approval in Taiwan as well as China, but an analyst welcomed the deal, saying the purchase would be the first direct investment by a Chinese state-owned company in Taiwan in six decades.

The transaction could spur the signing of financial memorandums of understanding in the near future as the cross-strait relationship improves, the analyst said.

“Both sectors are considered politically sensitive, so if a telcoms operator can sell a stake to the PRC, why not a bank?” Peter Kurz, head of Taiwan equity research at Citigroup Global Markets, wrote in a client note yesterday.

Also See: Yiin details Chinese investment plan

Also See: Markets to be opened to Chinese firms

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