Taiwan Cellular Corp (台灣大) yesterday announced it will merge with smaller rival Mobitai Com-munications Co Ltd (東信電訊) to forge the nation's largest mobile service operator and pave the way for the arrival of speedy data-oriented next-generation services as early as next year.
Taiwan Cellular, the nation's No.3 mobile operator by subscribers, signed a memorandum of understanding yesterday with Mobitai's biggest shareholder, Teco Electric and Machinery Co (
"With the increase of customers following the consolidation, I believe the deal will give us a better position in the upcoming battle over advanced third-generation [3G] services," said Taiwan Cellular chairman Daniel Tsai (
Taiwan Celluar's subscription accounts will climb to around 8.2 million users after adding Mobitai's 700,000 users, outnumbering state-run Chunghwa Telecom Co (
The proposed acquisition will be Taiwan Cellular's second after incorporating Kaohsiung-based TransAsia Telecommunications Inc (
Taiwan Cellular president Harvey Chang (
"We're very glad about the marriage," Huang said.
Teco holds a 65-percent stake in Mobitai.
Under the agreement, Taiwan Cellular will purchase a hefty two-thirds of Mobitai shares, or about 181 million, at NT$13.52 each in cash by the end of September.
The shares will cost Taiwan Cellular NT$2.45 billion.
Taiwan Celluar said it plans to increase its Mobitai holdings to 100 percent by buying up the remaining one-third stake through share swap by the first quarter of 2006.
The swap ratio has not been finalized yet. But Taiwan Cellular said the calculation base will be the average of its shares over the past 10 days trading sessions, which comes to NT$32.12 each.
"The price Taiwan Cellular offered is very reasonable," said Stevie Chou (
The price of NT$13.52 each is much lower than Mobitai's net value of NT$23.83 a share.
Chou also said the consolidation will help prevent a fierce price war by small mobile carriers to snare subscribers when the government opens portable mobile numbers so that users will be able to switch operators while keeping the same phone numbers early next year.
Chou said the sale is a good chance for Teco to pull out of the nation's competitive telecom market as it plans to focus on its core business of making liquid-crystal-display (LCD) TVs, freezers and other home appliances.
Taiwan Cellular shares were unchanged yesterday at NT$31.7 on the TAIEX.
In the first four months of the year, Taiwan Cellular earned NT$1.42 per share.
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