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.
The CIA has a message for Chinese government officials worried about their place in Chinese President Xi Jinping’s (習近平) government: Come work with us. The agency released two Mandarin-language videos on social media on Thursday inviting disgruntled officials to contact the CIA. The recruitment videos posted on YouTube and X racked up more than 5 million views combined in their first day. The outreach comes as CIA Director John Ratcliffe has vowed to boost the agency’s use of intelligence from human sources and its focus on China, which has recently targeted US officials with its own espionage operations. The videos are “aimed at
STEADFAST FRIEND: The bills encourage increased Taiwan-US engagement and address China’s distortion of UN Resolution 2758 to isolate Taiwan internationally The Presidential Office yesterday thanked the US House of Representatives for unanimously passing two Taiwan-related bills highlighting its solid support for Taiwan’s democracy and global participation, and for deepening bilateral relations. One of the bills, the Taiwan Assurance Implementation Act, requires the US Department of State to periodically review its guidelines for engagement with Taiwan, and report to the US Congress on the guidelines and plans to lift self-imposed limitations on US-Taiwan engagement. The other bill is the Taiwan International Solidarity Act, which clarifies that UN Resolution 2758 does not address the issue of the representation of Taiwan or its people in
US Indo-Pacific Commander Admiral Samuel Paparo on Friday expressed concern over the rate at which China is diversifying its military exercises, the Financial Times (FT) reported on Saturday. “The rates of change on the depth and breadth of their exercises is the one non-linear effect that I’ve seen in the last year that wakes me up at night or keeps me up at night,” Paparo was quoted by FT as saying while attending the annual Sedona Forum at the McCain Institute in Arizona. Paparo also expressed concern over the speed with which China was expanding its military. While the US
SHIFT: Taiwan’s better-than-expected first-quarter GDP and signs of weakness in the US have driven global capital back to emerging markets, the central bank head said The central bank yesterday blamed market speculation for the steep rise in the local currency, and urged exporters and financial institutions to stay calm and stop panic sell-offs to avoid hurting their own profitability. The nation’s top monetary policymaker said that it would step in, if necessary, to maintain order and stability in the foreign exchange market. The remarks came as the NT dollar yesterday closed up NT$0.919 to NT$30.145 against the US dollar in Taipei trading, after rising as high as NT$29.59 in intraday trading. The local currency has surged 5.85 percent against the greenback over the past two sessions, central
RSS