Foreign companies will take advantage of the liberalization of the telecoms market once Taiwan joins the WTO by forming partnerships with local players, analysts say.
"For international players, to buy or cooperate with local companies is the most efficient way to get a piece of the pie," said Kirk Lee (李仲克), co-convener of the telecommunication committee at the American Chamber of Commerce in Taipei.
Lee, also deputy manager at Mackay Telecommunications, explained that overseas firms can can get a jump on local competitors by linking with seasoned industry veterans.
"This is especially true now that the market is opening, and investment and operational restrictions are gradually being relaxed," Lee said.
Building a telecom venture from scratch takes years, Lee said, especially in getting the licenses and building the infrastructure.
But another telecom industry analyst said the expected infusion of outside capital and know-how will be a blessing to the creation of third-generation (3G) mobile services in Taiwan.
"To lessen the financial burden in building top-notch 3G networks, mobile operators need to align with investors, especially those who can provide technical support as well," said Jason Chang (張學孔), director of Science and Technology Advisors at the Ministry of Transportation and Communications.
According to the ministry, the ceiling on direct foreign ownership in local telecom companies is set to be raised from 20 percent to 49 percent.
In addition, international fiber-optic submarine cable providers -- permitted to sell services only to four local fixed-line operators -- will be able to do business with other Internet service providers or any private firms who need network transmission capabilities.
The two proposals -- approved by Minister of Transportation and Communications Yeh Chu-lan (葉菊蘭) early last month -- are expected to be passed by the Legislative Yuan next February.
"The government realizes that the telecom market is a technology and capital-intensive industry, thus we have to further open the market to upgrade the nation's competitive edge," Chang said.
Raising the ceiling on direct foreign ownership in local telecoms is seen as a boon for three key players, Taiwan Cellular Corp (台灣大哥大), Far EasTone Telecom Co Ltd (遠傳電信) and KG Telecom Co Ltd (和信電訊).
The three have nearly reached their investment ceilings, thus the new policy will enable more foreign investors to buy shares, said Alex Wu (吳興國), a telecom analyst at China Securities Co Ltd (中信證券).
But the ministry set the combined direct and indirect investment ceiling for the king of Taiwan telecom at 20 percent.
"State-run Chunghwa Telecom Corp (中華電信) won't be able to get as much support as the private companies," Wu said.
Telecom firms appreciate the changing government attitude.
"We were keenly interested in entering Taiwan for years and, with deregulation, our company is glad to be able to enter [what used to be a] monopolized market," said Feng Chian (錢鋒), general manager at Asia Global Crossing, the first foreign submarine cable operator in Taiwan.
Despite growing market competition, local companies are looking forward to the foreign invasion.
"We would like to employ advanced technology to facilitate our network infrastructure and service operations," said Irene Chi, public relations manager at Taiwan Cellular.
RSS