Far EasTone Telecommunications Co (遠傳電信), the nation's third largest mobile-phone service operator, announced yesterday it would spend about NT$30 billion in a cash-and-stock swap to take over smaller rival KG Telecommunications Co (和信電訊).
The two companies signed a letter of intent yesterday. Based on the agreement, for every KG Telecom share, Far EasTone will pay NT$6.864 cash and 0.46332 of its shares.
"Through our alliance, we will be able to reach a larger economy of scale and strengthen our market position," Douglas Hsu (徐旭東), chairman of Far EasTone, said at a press conference.
The acquisition will boost Far EasTone's customer base to some 7.7 million users and make it the country's second largest mobile-phone service operator, after Taiwan Cellular Corp's (台灣大哥大) 8.6 million users, but ahead of state-run Chunghwa Telecom Co's (中華電信) 7.67 million users.
"KG Telecom is delighted to be part of a big telecom player ... this enables us to be more involved in this competitive and fast-moving industry," said Leslie Koo (辜成允), chairman of KG Telecom.
The transaction leaves KG Telecom with 800 million Far EasTone shares along with NT$11.9 billion in cash.
KG Telecom, along with its well-known i-mode service, is expected to be absorbed into Far EasTone's operations.
"Basically the new company will still operate as Far EasTone, and KG Telecom will become a part or a brand under the company," Hsu said.
Hsu said it may take at least one month for both parties to discuss future operations and management details.
According to a bank official involved in the merger deal, KG Telecom will control 23 percent of Far EasTone's shares and retain several seats on the board.
Koo will become one of Far EasTone's board members and "play a very important role in the new company," said Ronald Song (宋雲峰), an executive of ABN Amro Holdings NV, which advises KG Telecom.
The proposed merger is expected to improve Far EasTone's competitive edge for the coming high-speed mobile Internet era.
"The move will help us to successfully migrate to third-generation [3G] mobile services," Hsu said.
A telecom analyst said a larger customer base can lower an operator's average cost in setting up 3G networks and the merger is on the right track, as the local mobile-service market is nearly saturated.
"Severe competition has left second-tier players no room to expand or to profit," said Nathan Lin (林宗賢), an analyst at SinoPac Securities Corp (建華證券).
In a bid to get a foothold in the 3G market, it is necessary to have a strong customer base, he said.
SURPRISE GUEST: Media reports identified the visitor as Admiral Michael Studeman, director of the J2, which oversees intelligence at the US military’s Indo-Pacific Command A two-star US Navy admiral overseeing US military intelligence in the Asia-Pacific region has made an unannounced visit to Taiwan, two sources told Reuters on Sunday. The sources, who include a Taiwanese official familiar with the situation, said the official was Rear Admiral Michael Studeman. They were speaking on condition of anonymity. After initially saying on Sunday night that it had no comment about the report, the Ministry of Foreign Affairs said it welcomed the visit of an “unidentified US official,” but declined to give more details because the trip “has not been made public.” Presidential Office spokesman Xavier Chang (張惇涵) yesterday
AUTUMN STRUGGLE: The KMT and TPP set up stages on the rally’s sidelines, while Want Want boss Tsai Eng-meng said the DPP was curtailing freedom of speech Tens of thousands of people in Taipei yesterday took part in the “Autumn Struggle” (秋鬥) — an annual protest march by labor groups — but with this year’s focus on rejecting the government’s plan to allow imports of US pork containing ractopamine residue. “Against poisonous pork, against double standards, against a party-state,” the protesters, mostly wearing black, chanted in front of the rally’s main stage on Ketagalan Boulevard at about noon, before a parade set off at 2pm. Autumn Struggle spokesperson Lee Chien-cheng (李建誠) said this year’s march was divided into three teams, with the first team urging food safety and labor
DEFENSE: The construction of indigenous submarines will be a testament to the nation’s commitment to safeguard its sovereignty, President Tsai Ing-wen said President Tsai Ing-wen (蔡英文) yesterday presided over a ceremony to mark the start of construction of the nation’s first indigenous submarine at state-run shipbuilder CSBC Corp’s (台灣國際造船) shipyard in Kaohsiung. “This submarine is an important part of allowing our navy to develop asymmetric warfare and to intimidate and block enemy ships from surrounding Taiwan’s main island,” Tsai said. “With the construction of the submarine to its future commission, we will certainly let the world know our persistence in safeguarding our sovereignty.” Tsai has made boosting the nation’s indigenous defense capacity a central pillar of her defense policy. She recently relaunched the
TIMELINE QUESTIONS: Chen Shih-chung said: ‘If anyone could assure us that we could get the shots in the first quarter of next year, we could set off firecrackers’ Taiwan has secured nearly 15 million COVID-19 vaccine doses, the Central Epidemic Command Center (CECC) said yesterday, as it reported five new imported infections among travelers from Indonesia and the Philippines. Minister of Health and Welfare Chen Shih-chung (陳時中), who heads the center, said that Taiwan on Monday signed a procurement contract with a COVID-19 vaccine manufacturer and paid a deposit to secure 10 million doses. It was the first contract finalized with a manufacturer and negotiations are under way with three other vaccine makers, Chen said. With the more than 4.6 million doses that can be obtained through the COVAX platform —