Thu, Feb 09, 2017 - Page 1 News List

Far EasTone withdraws bid for CNS

BARRIERS:The telecoms said it does not plan to invest in cable companies as long as restrictions on government funds holding stakes in media companies remain

By Lisa Wang and Shelley Shan  /  Staff reporters

Protesters perform a skit outside the offices of the National Communications Commission, the venue of a public hearing on Far EasTone Teleclecommunications Co’s bid to buy cable TV operator China Network Systems Co, on Dec. 29 last year.

Photo: Huang Yao-cheng, Taipei Times

Far EasTone Telecommunications Co Ltd (遠傳電信) yesterday said it is withdrawing a NT$74.5 billion (US$2.39 billion) buyout bid for local cable TV operator China Network Systems Co Ltd (CNS, 中嘉網路), along with its partner Morgan Stanley Private Equity Asia IV’s (MSPE), due to a lengthy regulatory review.

The telecoms’ comments came after CNS’ major shareholder, MBK Partners LP, and MHPEA Chrome Holding BV, a subsidiary of Morgan Stanley, agreed to initiate a revocation of the acquisition deal. The investment project was touted as one of the largest cable TV acquisition deals in recent years in the nation.

“To prevent the review of the deal from affecting the company’s operational development and plans, the company, MBK and MSPE have agreed to initiate the revocation [of the bid],” CNS said in a statement yesterday.

The National Communications Commission (NCC) has requested a second review of the case, despite giving a conditional go-ahead to the acquisition in January last year.

The Fair Trade Commission also approved the deal in 2015.

Facing mounting criticism, the Investment Commission returned the case to the NCC for further review to clarify if the deal violates regulations barring investment in media outlets by the government, political parties and the military.

The developments “are different from what we originally expected,” Far EasTone said in a separate joint statement with MSPE.

Speculation swirled that MSPE was withdrawing its application because of the slim chance that it would receive regulatory approval.

In July 2015, MSPE offered to buy a significant stake in CNS from MBK through a holding company called North Haven Private Equity Asia IV LP (NPHEA).

Far EasTone would indirectly own a stake of CNS, as it spent about NT$17.12 billion in cash subscribing to corporate bonds issued by NPHEA’s local subsidiary.

The deal would have allowed Far EasTone to complete the last piece of its digital convergence drive, as the partnership with MSPE would have helped it tap into the nation’s cable TV and fledgling smart home markets.

CNS has a 25.7 percent share of the local cable TV market, with 1.29 million subscribers.

Far EasTone said it does not plan to invest in cable TV companies as long as the government does not relax restrictions on the government, political parties and military holding stakes in media outlets.

The telecoms is restricted from buying a stake in CNS because government funds hold an unspecified share of Far EasTone.

“The law is obsolete,” Far EasTone said.

The company said it plans to allocate the NT$17.12 billion to foster digital convergence and deepen its cooperation with content providers and over-the-top operators.

The company added that its collaboration with CNS would not be affected by the cancelation of the acquisition deal.

NCC spokesman Wong Po-tsung (翁柏宗) said the commission has yet to receive requests from CNS or MSPEA to withdraw their applications.

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