Taiwan Telco Aims to Wrap Sale to China Mobile by 2010

Far EasTone, one of Taiwan's top three mobile carriers, on Wednesday said it hopes to complete its controversial sale of a 12 percent stake to China's dominant carrier China Mobile by early next year.

The two companies announced their landmark tie-up in April, saying China Mobile would pay $529 million for the stake. Since then, however, many have cast doubt on the plan, which is technically still not allowed because of restrictions on investments in Taiwan by Chinese companies.

We passed the resolution at yesterday's shareholder meeting, so now we are on the path to take the case forward, including seeking approval," Far EasTone chairman Hsu Shu-tong told Reuters in an interview in Hong Kong.

The process would take some time, but Far EasTone hoped to complete it by late this year or early 2010, said Hsu, who is in Hong Kong for Asia Cement (China) Holdings Corp's shareholder meeting.

Taiwan has opened 101 categories for China investments and Hsu expects the government to open the market step by step to the financial and telecom sectors.

Far EasTone was also in talks to form a 50-50 joint venture with China Mobile in China, which could be aimed at helping Taiwan providers of online and mobile content, and software go to China, he said.

Under Taiwan President Ma Ying-jeou, who took office in May last year, top policymakers from China and Taiwan have met three times in the past six months and signed deals to open up the tourism, shipping and airline sectors.

China Mobile's announcement of its Far EasTone tie-up sparked hopes that thawing relations between the former Cold War rivals could lead to more major deals.

Under the previously announced deal, China Mobile, the world's largest mobile carrier by users, will pay T$40.00 per share for the stake in one of Taiwan's top three telecoms carriers.

Far EasTone shares closed down 0.65 percent at T$38.35 on Wednesday against China Mobile's offer of T$40.00 per share. But the stock is still up 9 percent since the plan was announced.

However, Taiwan's government last month said it would not examine China's Mobile's plan to buy the Far EasTone stake for now, as the island's telecom industry was not on the initial list of investments to be allowed.

The telecom category could be included in additional lists in the near term if cross-strait ties continued to warm at the same rapid rate, some analysts said.

Hsu, who is also chairman of Taiwan's Far Eastern Group, said the conglomerate had invested about $5 billion in China to date in areas from textiles to cement and petrochemicals.

"China is a growth market, but we will take a cautious approach this year depending on developments in the world economy," he said. "Cash is king."

But Hsu said the group was interested in making strategic investments in China's shipping market through its Taiwan listed arm U-Ming Marine Transport.

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