Fri, Feb 24, 2017 page4

• NCC approves bid for TBC acquisition

  CONDITIONAL: The approval came with 22 conditions, including promises to halt TBC’s analog transmission by the second quarter and upgrading its facilities

  • By Shelley Shan / Staff reporter
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  The National Communications Commission (NCC) on Wednesday gave its preliminary approval to Asia-Pacific Telecom (APT) chairman Lu Fang-ming’s (呂芳銘) application to acquire Taiwan Broadband Communications (TBC) — the nation’s third-largest multiple-system operator — but listed 22 conditions that Lu must follow to secure final approval.

  The deal was approved after the commission deliberated over the case for about a year, including holding one administrative hearing and one public hearing.

  APT is a publicly traded firm and counts four major government funds among its investors.

  Given regulations banning the government, political parties and the military from investing in the media, Lu and Hon Hai Precision Industry Co chairman Terry Gou (郭台銘) orchestrated the deal by first co-establishing a company, Dynami Vision, in Singapore, which owns 3 percent of the shares of Asia Pay Television Trust (APTT).

  APTT is a publicly traded firm in Singapore and owns 100 percent of TBC shares.

  The deal would allow Lu to indirectly own TBC if it is approved.

  Commission spokesman Wong Po-tsung (翁柏宗) said that the 22 conditional clauses are mainly promises that Lu has made to secure the deal, including upgrading TBC’s infrastructure.

  Lu has pledged to stop TBC’s cable TV analog transmission next quarter and upgrade its cable headend by the fourth quarter, Wong said.

  TBC will also upgrade its broadband service facility to raise its transmission speed to 500 megabits per second by next year and 1 gigabit per second by 2019, Wong said.

  To ensure that Lu does not infringe regulations barring the government, political parties and the military from investing in media outlets, Lu was told that he must not transfer his shares of TBC to either APT or Hon Hai, both of which are publicly traded firms in Taiwan.

  Should Hon Hai or APT want to assign representatives as board members or overseers at TBC, the assignment must first be approved by the commission, Wong said, adding that TBC must not engage in illegal concerted actions with other companies.

  To assuage public concern over media monopolization, Lu also promised that he would not operate a news channel, Wong said.

  Lu was also asked to submit plans to the commission on how he would reduce the debt ratios of the cable systems under TBC, even though he has promised that the deal would not increase the debt burden borne by each one of them.

  “We understand that cable system operators are in a bind when they are asked to invest in infrastructure and reduce their debt at the same time. As such, the commission has set a timeline nor a debt ratio for operators to follow,” Wong said.

  The deal would cost Lu US$4.5 million, the commission said.

  As Lu owns only 3 percent of APTT’s shares, the commission included a condition that he must ensure that his right to manage funds is secure.

  While Lu has made headway in his quest to acquire TBC despite government funding in APT, Morgan Stanley’s move to acquire China Network Systems was thwarted because of the question of government funding.

  “Lu applied to purchase TBC on his own,” Wong said. “Each case is different and cannot be evaluated using the same standards. All telecom companies are publicly traded firms and may include funding from the government. The indsutry still needs an influx of capital from the free market. We could achieve a breakthrough on the issue of government investment in media outlets if an industrywide consensus can be reached.”
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