The National Communications Commission (NCC) yesterday asked the investment team acquiring China Network Systems (CNS) to provide more specific information on how it plans to manage the nation’s largest multiple-system operator if the deal is approved.
CNS has about 1.22 million cable service subscribers across the nation.
An investment team led by KHL Capital chairman Gary Kuo (郭冠群) earlier this year signed a deal with the MBK Partners, CNS’ largest shareholder, to purchase its shares, which were worth NT$51.5 billion (US$1.68 billion at the current exchange rate).
Two of the investment team’s largest shareholders are investment firms affiliated with the Y.L. Lin Hung Tai Education Foundation, which is owned by the Hung Tai Group, a real-estate developer.
The acquisition requires the approval of the Investment Commission, the NCC and other relevant government agencies.
This would be the fourth time that MBK Partners has tried to sell CNS.
To review the case, the commission said that it has consulted experts and hosted a public hearing, as well as an administrative hearing.
NCC commissioners conducted a preliminary review of all the information regarding the deal in the commission’s weekly meeting yesterday, NCC spokesperson Wong Po-tsung (翁柏宗) said, adding that they found that some of the promises made by the buyer were not stated in specific terms.
“For example, the investment team said that it plans to raise capital expenditure by 20 to 25 percent annually. It also said that it would start offering a broadband Internet service at 1 gigabits per second and reduce the number of subscribers that each fiber optic node serves in the cable network to below 200 within one year of the transaction being approved. It further stated it has a plan to establish a CNS college,” Wong said.
Although the investment team intended to show goodwill by making these promises, Wong said that the commissioners want to see more details on how it plans to make good on them.
Besides requesting the buyer to put those details down on paper, the investment team would be asked to answer questions directly from the commissioners once the NCC begins an substantive examination of the deal.
Regarding the foundation’s role in the deal, Wong said that the two investment firms affiliated with the foundation were formed before the foundation was established, and they donated their shares to the foundation’s public trust fund when they were established in 2009 and 2015.
The commission had yet to confirm whether this contravene regulations, Wong said.
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