Despite vehement opposition from its labor union, the state-controlled Chunghwa Telecom Co (中華電信) yesterday auctioned off a 3 percent government stake, or 289.43 million shares, to domestic investors at a floor price of NT$56.3 (US$1.76) a share, injecting around NT$16.29 billion into the state's coffers.
The auction price represents a 7.71 percent discount on the company's closing share price yesterday and a 12.73 percent discount on the average share price over the last 10 days, company vice-president and spokesman Hank Wang (王漢朝) said.
Chunghwa shares closed 0.81 percent down at NT$61 on the Taiwan Stock Exchange. The telecom giant's average closing price over the last 10 days was NT$64.51.
PHOTO: WANG MING-WEI, TAIPEI TIMES
"The discount [of 12.73 percent] is larger than expected and therefore buyers are getting a bigger benefit," Wang said. He was speaking at a press conference following the after-hours auction of the company's shares -- part of the government's privatization efforts.
The sizable discounts will not cause losses to the treasury and are within an acceptable range, Wang said.
The Ministry of Transportation and Communications, the company's biggest shareholder, originally expected to make NT$17.5 billion through the domestic sale.
According to Capital Securities Corp (群益證券), which managed the sale, 76.6 percent of the shares went to retail investors while institutional investors bought the rest.
Jonathan Liao (廖俊傑), an analyst with SinoPac Securities Corp (建華證券), said Chunghwa Telecom has finally stepped into the last phase of its long-winded privatization history. It will set an example for stimulating the government's plans of privatizing other state-controlled entities in the future, he said.
"To enhance the company's competitive edge by means of privatization, management cannot give in too much to the [labor] union, which would naturally resort to fierce protests to safeguard their interests," Liao said.
To protest the share sale, members of the Chunghwa Telecom Workers' Union (中華電信工會) staged strikes nationwide yesterday morning. Some employees gathering outside the main offices in northern, central and southern Taiwan chanted slogans and held posters accusing the government of illegally selling nearly 14 percent of the company's shares to overseas investors in the form of American Depositary Receipts (ADRs).
Union members swarmed into branches to interrupt operations and made phone calls en masse three times in an attempts to paralyze the telephone networks of the Executive Yuan, the Ministry of Transportation and Communications, and some of Chunghwa's operation units.
Company executives yesterday claimed that the union's strike action was under control and phone services remained normal.
"The rate of attendance [to work] reached a high point of 95 percent today [yesterday] and the strike has been carried on in a rational and peaceful mode," vice-president Chang Feng-hsiung (張豐雄) told a press briefing.
The directory service line (telephone number 104) was temporarily affected because of a personnel shortage but normal services resumed at noon yesterday, Chang said.
As the strike's smaller-than-expected turnout seemingly failed to catch management's attention, the union decided to step up its protests by starting a hunger strike at 5:30pm yesterday.
The hunger strike is expected to last for two to three days as the US Securities and Exchange Commission (SEC) may approve the company's application to sell ADRs soon, according to Chang.
"We believe that more than half of the company's employees are disgruntled about the government's illegal share sales overseas, but most of them dare not stand up to voice their indignation. We just want to present the truth," said Simon Chang (張緒中), a union leader.
The company refused to give details on any discounts offered for the ADR sale, citing confidentiality.
After the 14 percent government stake has been sold through ADRs, the ministry's stake in the company will be reduced from the current 65 percent to around 48 percent, turning Chunghwa Telecom into a private entity.
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