China Mobile to invest in Taiwan-based mobile telecom carrier FET for 12% stake
Far EasTone Telecommunications (FET), one of the three largest operators of mobile communication service in Taiwan, on April 29 signed with China Mobile Communications, the largest mobile telecom carrier in China, for a strategic alliance and the latter's investment in FET for a 12% stake.
FET said it will issue 444.341 million new shares specifically for private placement by China Mobile at a tentative price of NT$40 per share, a 13.64% premium based on the closing price of NT$35.2 per FET share on April 29, for total investment of NT$17.774 billion (US$528 million).
The subscription of the new shares is equivalent to a 12% stake after the issuance, and China Mobile will set up a wholly-owned subsidiary in Taiwan to hold the stake on behalf of China Mobile, FET said.
The strategic alliance is for cooperation in joint procurement, offering of voice/data roaming and value-added services as well as technological R&D, FET noted.
In addition, FET and China Mobile will establish a joint venture in China, with the former holding a 49% stake and the latter a 51% stake, FET indicated. The joint venture will be a platform for cooperation as well as for Taiwan hardware and software providers to test their products for applications to TD-SCDMA, China-developed 3G standard, in the China market, FET emphasized.
With Japan-based NTT DoCoMo and Singapore Telecom (SingTel) holding 4.7% and 4% respectively stakes in FET, China Mobile will become the largest single foreign shareholder of FET, FET noted.
However, China Mobile's investment in FET is subject to approval by Taiwan's National Communications Commission and the Investment Commission under the Ministry of Economic Affairs.
Taiwan imposes restrictions on foreign investments in local telecom carriers: the total amount of direct investments cannot exceed 49%, and the cap for the total sum from direct and indirect investments is 60%.
FET said it will issue 444.341 million new shares specifically for private placement by China Mobile at a tentative price of NT$40 per share, a 13.64% premium based on the closing price of NT$35.2 per FET share on April 29, for total investment of NT$17.774 billion (US$528 million).
The subscription of the new shares is equivalent to a 12% stake after the issuance, and China Mobile will set up a wholly-owned subsidiary in Taiwan to hold the stake on behalf of China Mobile, FET said.
The strategic alliance is for cooperation in joint procurement, offering of voice/data roaming and value-added services as well as technological R&D, FET noted.
In addition, FET and China Mobile will establish a joint venture in China, with the former holding a 49% stake and the latter a 51% stake, FET indicated. The joint venture will be a platform for cooperation as well as for Taiwan hardware and software providers to test their products for applications to TD-SCDMA, China-developed 3G standard, in the China market, FET emphasized.
With Japan-based NTT DoCoMo and Singapore Telecom (SingTel) holding 4.7% and 4% respectively stakes in FET, China Mobile will become the largest single foreign shareholder of FET, FET noted.
However, China Mobile's investment in FET is subject to approval by Taiwan's National Communications Commission and the Investment Commission under the Ministry of Economic Affairs.
Taiwan imposes restrictions on foreign investments in local telecom carriers: the total amount of direct investments cannot exceed 49%, and the cap for the total sum from direct and indirect investments is 60%.
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