Although Chunghwa Telecom (
The reason: By some esti-mates, the value of the three offerings would come to roughly NT$700 billion, more than the domestic stock market could absorb at one time.
"The privatization of Chunghwa Telecom has to be completed as scheduled," said K. L. Chang (張桂林), director of the Sectoral Planning Department at the Cabinet's Council for Economic Planning and Development (CEPD, 經建會). "The fixed network telecommunication market is scheduled to open in 2001."
On the other hand, Chinese Petroleum and Taiwan Power still face legal and political roadblocks, whereas monopoly telephone service provider Chunghwa faces none.
"Chinese Petroleum will have difficulties in meeting the deadline," Chang said. And although the government hasn't changed the privatization timetable, "We will adjust the privatization speed in accordance with the stock market's capacity.
"Because of the overall huge scale of the three currently state-owned enterprises, the release of their shares into the domestic market cannot be carried out simultaneously," he said.
As a result, Chang said Chung-hwa Telecom will be privatized first, followed by Chinese Petroleum and then Taiwan Power.
Chang also said that although the legislators Tuesday lowered Chunghwa Telecom's overseas stock ratio from 18 percent to 12 percent, the 10 to 15 percent ratio for Chinese Petroleum and the 8.75 percent ratio for Taiwan Power Company will remain.
While legal considerations puts Chunghwa Telecom at the top of the government's public offering schedule, analysts said the privatization sequence also makes economic sense.
"It makes sense that the government puts priority on Chung-hwa Telecom," said an analyst with ABN AMRO (2?齠??, who asked not to be identified.
With the passage of the Telecommunication Law in October, "Telecommunications is the hot industry right now, and foreign investors are very interested in the company in light of Morgan Stanley Capital International putting more weight on Taiwan stocks," he said.
In addition, the analyst said Chunghwa's expected initial share price of NT$60 was a significant discount compared to what the shares could command on the open market. Based on Chunghwa's performance and prospects, he said, the company is worth a conservative estimate of NT$100 per share.
Liu Yie-cheng (
"The share price may drop as a result," Liu said.
There is also another benefit of Chunghwa Telecom being privatized first. "Chunghwa Telecom can set up a good example of a large-scale enterprise's privatization," Liu said.
In addition, he said, because of the high demand for Chunghwa's shares, the cost to take the company public is lower than typical stock offerings.
According to the government's requirements, the Oil Management Law (
Government officials and legislators are expected soon to begin a 15th round of negotiations on the Oil Management Law (
Meanwhile, the Executive Yuan delivered the Electricity Law (
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