Possible Merger in Taiwan

Taiwan's Far EasTone has confirmed that it is in talks with KG Telecommunications regarding a possible merger of the two companies. The company stress however that the transaction is still being discussed by the parties and no agreement has been reached.

Far EasTone made the announcement after Chinese-language media reported that Far EasTone plans to merge with KG Telecom in a share and cash swap that would be worth around US$835 million.

"The nation's mobile phone service market is nearly saturated," said Nathan Lin, an analyst at SinoPac Securities Corp told Taipei Times after hearing of the merger talks.

The merged company would have a subscriber base of around 7.7 million, following the incorporation of KG Telecom's existing 3.34 million subscriber base, and would make it the country's second largest mobile phone network behind Taiwan Cellular.

Japan's DoCoMo currently owns just over 21% of KG Telecom, and is using the company as a foothold to spread its i-mode service into Taiwan. The company may be persuaded to sell if offered the opportuntity to keep its i-mode service in use, and expand it to the entire base of the enlarged company.

According to figures from the Ministry of Transportation and Communications, the country has about 25 million mobile phone accounts, and in a country with a population of just 23 million, there is now little opportunity for subscriber growth."

Posted to the site on 30th June 2003