Far EasTone Telecommunications Co. (遠傳), one of Taiwan's top mobile phone service providers, said yesterday it expected to complete stock market listing requirements by March and launch its initial public offering (IPO) sometime later in the year. A Bloomberg report pegged the listing in September, without citing sources.
The company also announced its profits doubled last year, rising 147 percent to NT$4.04 billion (US$122 million). Revenues increased 73 percent year-on-year to NT$32.18 billion (US$975 million) on sales of about NT$1,050 per customer per month. The company expects profits to rise to NT$7.4 billion this year on sales of NT$44 billion.
"I'm very pleased with Far EasTone's performance," said Douglas Hsu (
"I'm also very impressed with the Taiwan market, almost twice the cellular penetration rate as the United States," he added.
Far EasTone officials also plan to list the firm on Taiwan's over-the-counter TAISDAQ stock exchange, but they refused to offer a specific time or share price. According to analysts, the size of the listing could be as much as 10 million shares. The firm's shares traded on Taiwan's 'Gray Market' -- a quasi-legal market for unlisted company stock transactions -- yesterday at NT$53.4 per share.
But questions remain on how much investor interest the Far EasTone listing may generate. Although the company's fundamentals appear sound, local stock investors have battered telecom-related issues.
Chunghwa Telecom (中華電信) was sent reeling from a listing price of NT$104 down to yesterday's close of NT$78, and in a more ominous sign, top mobile phone service provider, Taiwan Cellular Corp (台灣大哥大), dropped from its listing of NT$86 down to yesterday's close of NT$56 per share.
"The reason I think [a Far EasTone stock sale] is positive and it should not be a repeat performance of Taiwan Cellular is because" current Far EasTone shareholders will hold on to their stocks instead of selling immediately after listing, unlike Taiwan Cellular's shareholders, according to Carl Berrisford, telecom analyst at Indosuez W.I. Carr Securities.
When Taiwan Cellular listed on the stock market, the firm's original shareholders were able and ready to sell off their shares immediately. Berrisford estimates over 50 percent of the shareholders did not meet lock-in requirements and could immediately sell the stock.
In a stock listing, original shareholders holding more than 10 percent of a company's shares are "locked-in" to the firm and cannot sell shares for up to a year after listing. After that time, if they plan to sell shares, they must first apply to the Securities and Futures Exchange.
Acer Computer and other pre-market investors of Taiwan Cellular unloaded millions of shares after the listing, driving the price down. Analysts estimate Acer bought Taiwan Cellular stock for about NT$8 per share, making the NT$86 listing price attractive.
"Far Eastone is quite different," explained Berrisford, because major shareholders Far Eastern Textile holds 53 percent of its shares and AT&T has 21 percent, all of which will be locked in for up to a year after the listing. Only an estimated 20 percent of Far Eastone shares are held by companies able to sell as soon as it lists on the bourse.
Far Eastone officials also announced a restructuring of AT&T's share holdings to allow more foreign investors in on the company. Currently, Taiwan's laws permit only 20 percent of a telecommunication's company shares to be held by foreigners, but an additional can be held indirectly.
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