Thu, Dec 06, 2018 page2

• Hong Shun bid for CNS approved

  BUYER’S PROMISES: The coverage of CNS’s fiber optic network would be expanded from 50 to 73 percent and cable subscribers would have access to fast broadband

  • By Shelley Shan / Staff reporter
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  The National Communications Commission (NCC) yesterday approved Hong Shun Investment Co’s acquisition of the multiple system operator China Network Systems (CNS), saying that the buyer has pledged to invest NT$4 billion (US$129.84 million) on media literacy education and other charitable activities over the next 10 years.

  Hong Shun was created by investment firms owned by the Y.L. Lin Hung Tai Education Foundation, founded by real-estate tycoon and former Hong Tai Group chairman Lin Yu-lin (林堉璘).

  The deal has been seen as a controversial example of big corporations establishing charitable foundations as tools for investment and alleged tax-evasion.

  Democratic Progressive Party (DPP) lawmakers on Tuesday said that the deal might involve funding from Chinese investors, adding that the commission should halt its review of the case and let the National Security Bureau investigate the deal’s sources of funding.

  NCC spokesman Wong Po-tsung (翁柏宗) yesterday said that the deal does not involve Chinese funding, adding that the total cost of the transaction is NT$51.5 billion.

  The commission approved the acquisition after the buyer and the stakeholder made a total of 35 pledges, which were turned into provisions for its approval, Wong said.

  Of those, 32 were related to Hong Shun and three were related to the foundation, which is deemed as a stakeholder in the transaction, the commission said.

  Charitable spending in the first five years must be at least NT$1.5 billion and at least NT$2.5 billion in the second five years, it said.

  At least 10 percent of annual charitable spending must be dedicated to media literacy education and media quality enhancement programs, it added.

  Meanwhile, Hong Shun must report every six months on if and how the foundation has fulfilled its pledge, the commission said.

  “The foundation must follow the regulations set by the Ministry of Education, which supervises its operations. The NCC believes that the deal would help raise the level of media literacy education and media quality across the nation, as the buyer has specified the percentage of funding to be used for these purposes. The promise would thus enhance the ‘public interest’ as stated in the Article 23 of the Cable Radio and Television Act (有線廣播電視法), which the commission would also have to consider when reviewing the case,” Wong said.

  Other promises made by Hong Shun include raising the coverage of CNS’ fiber optical network from 50 percent to 73 percent by 2020.

  In addition, CNS cable service subscribers would be able to access the broadband service at a speed of 1 Gigabits per second within one year of the transaction’s conclusion, the company said.

  By April 2020, CNS cable subscribers would be able to have new set-top boxes installed in their homes, allowing them to watch the 2020 Tokyo Olympics Games in 4K quality, the company said, adding that the monthly salary of CNS technical personnel would be at least NT$30,000.

  The commission would ensure that the buyer fulfills all of its promises through reviews of license renewal applications filed by the cable systems under CNS, as well as evaluations of their performance and proposed monthly fees for subscribers, Wong said.

  The education ministry and the Ministry of Economic Affairs’ Investment Commission would each receive a copy of the commission’s ruling as a reference, Wong said.

  The NCC also barred CNS from operating news channels without its permission.

  The NCC in 2012 approved Want Want China Times Group’s purchase of CNS, provided that the group adhered to the condition that the deal would not lead to further concentration of media ownership.

  However, the approval was annulled in 2013 after Want Want failed to meet the condition.

  In January 2016, the NCC approved Morgan Stanley’s bid to buy CNS, as long as it agreed to meet certain conditions.

  However, the NCC in May 2016 reopened an investigation due to an indirect investment by Far EasTone Telecommunications in the deal — a move that commissioners deemed to breach regulations banning the government, the military and political parties from investing in media outlets, as four major government funds were invested in the telecom.

  CNS and Morgan Stanley last year withdrew their applications before the NCC could make a decision.
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