The National Communications Commission (NCC) yesterday said it is to hold an administrative hearing on Asia Pacific-Telecom chairman Lu Fang-ming’s (呂芳銘) bid to purchase Taiwan Broadband Communications (TBC), the nation’s third-largest multiple service operator, adding that Lu would be asked to present his case at the commission.
Earlier this year, Lu announced he had signed a sales and purchase agreement with Macquarie’s Singapore branch to acquire the Singapore-listed Asia Pay Television Trust (APTT), which owns 100 percent of TBC, adding he has purchased the APTT with 80 percent of funding coming from himself and 20 percent from Hon Hai chairman Terry Gou (郭台銘).
Market observers said that Asia Pacific-Telecom took an indirect route to acquire TBC because of regulations that ban political parties, the government and the military from investing in the nation’s media outlets and cable systems.
The state-run Taiwan Railways Administration is the second-largest shareholder in Asia Pacific-Telecom.
NCC spokesperson Wong Po-tsung (翁柏宗) announced the investment structure of the proposed deal during the news conference.
Wong said that Lu and Kuo purchased the Macquarie Asian Pay Television Trust (MAMPL), that manages APTT.
“Based on the sales and purchase agreement signed between Lu, Kuo and MAMPL, the acquisition would allow them to indirectly manage the TBC,” Wong said.
Wong said the sources of funding for the deal would be key in the review of the case.
The transaction must not have funding from the government, political parties or the military, Wong said, adding that nor can it have funding from China.
Meanwhile, Wong said the case would also be reviewed based on the criteria listed in Article 15 of the Cable Radio and Television Act (有線廣播電視法), which states that foreign applicants investing cable television business shall not affect national security, impair or disadvantage overall industrial development, hinder fair competition or make competition restraints.
Wong said the deal cost US$45 million, with 70 percent of the funds coming from bank loans. The remaining 30 percent would be jointly funded by Lu (US$10.8 million) and Kuo (US$2.7 million).
The acquisition was approved by the Fair Trade Commission in August, which viewed the case as an investment in a holding company or a fund management firm and a merger between conglomerates.
As to the Far Eastern Telecommunications’ (FET) bid to invest in the Chinese Network Systems (CNS) through the subscription of the corporate bonds issued by a subsidiary of the Morgan Stanley, Wong said that they told Morgan Stanley on Monday last week of the need to submit documents about the proposed investment to the commission, including the contracts between Morgan Stanley and FET, and between Morgan Stanley and the banks, as well as the contract governing FET’s purchase of the corporate bonds.
Contracts submitted to the commission must be in English and Chinese, he said.
“We have to cross-examine these documents to ascertain the relationship between Morgan Stanley and FET,” he said, adding that the commission does not exclude the possibility of hosting a public hearing for the transaction.
The commission has yet to receive all the required documentation from Morgan Stanley, he said.
The NCC gave its conditional approval in January for Morgan Stanley’s planned acquisition of CNS.
The Investment Commission suspended the review of case last month and returned the case to the NCC for a second review, citing concerns that FET might use the deal to evade regulations prohibiting investments in media outlets by the government, political parties and the military.
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