The National Communications Commission (NCC) confirmed yesterday that it received an application for foreign investment in China Network Systems Co, adding that it would investigate whether the deal would generate issues of media monopolization.
China Network Systems became the focus of public attention after Far EasTone Telecommunications, in a tie-up with Morgan Stanley Private Equity Asia, said last week that it would soon own a majority stake of the nation’s largest multiple-cable service operator via acquisition of corporate bonds to be issued by North Haven Private Equity Asia IV LP (NHPEA), adding that the transaction is to cost the nation’s third-largest telecom carrier NT$17.12 billion (US$539 million).
NHPEA in turn is to buy a 60 percent stake in China Network Systems from South Korean private equity firm MBK Partners LP, Far EasTone said.
Because the Cable Television Act (有線電視法) bans political parties, the government and the military from directly investing in media outlets, Far EasTone has to make an indirect investment in China Network Systems, as about 2.89 percent of Far EasTone’s shares are owned by four government funds.
The application was filed by Netherlands-based NHPEA Chrome Holding BV, which belongs to Morgan Stanley Private Equity Asia, the commission said.
It did not reveal further details about the application, saying that it has yet to begin reviewing the case.
Commission spokesperson Yu Hsiao-cheng (虞孝成) said the case would be reviewed based on regulations the commission is obligated to enforce, adding that it would review the case in light of issues of media monopolization as well.
Yu said the commission would ensure shareholders met the requirements of the law before it would approve the application.
Further deliberation among commissioners was required before a ruling could be made on whether Far EasTone could — as a creditor — manage cable services owned by China Network Systems, Yu said.
China Network Systems has 1.29 million cable television service subscribers nationwide. The cable service operator suffered two previous setbacks in mergers with local enterprises.
The first issue was in 2011, when it was to be sold to Want Want China Times Group for NT$76.2 billion. The deal was canceled because Want Want failed to meet conditions set by the commission in 2012 to ensure diversity of opinion among its broadcasts.
The second setback was last year, when it was to be acquired by Ting Hsin International Group, which founded fourth-generation service provider Taiwan Star. The transaction was reported to top NT$72.5 billion.
The acquisition was called off after Ting Hsin was found to have sold products containing adulterated oils in food products.
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