Taiwanese Networks to Merge

Taiwan's Far EasTone and KG Telecom have finally agreed to merge their companies. The merger has been on-off since July but was finally agreed yesterday. At present, FET and KGT have a combined subscriber base of approximately 7.75 million mobile users, which positions the merged entity as one of the top three players in Taiwan. In addition, the combined company will have the largest mobile service distribution platform in Taiwan through 460 sales outlets, representing 37% of the market, substantially ahead of its peers.

Douglas Hsu, Chairman of FET said "Far EasTone and KG Telecom both boast a large and loyal customer base, a sound brand image, a premium network as well as innovative and diversified product and service offerings. Going forward, the combined company will proceed with a dual-entity, dual-brand strategy to fully leverage the advantages of both companies to capture maximum potential synergies through brand and market segmentation. In addition, FET will establish a close partnership with NTT DoCoMo, a world-class leading mobile operator. This relationship will add tremendous value to our multimedia mobile services and future 3G related developments."

Leslie Koo, Chairman of KGT emphasized, "We believe that after assessing the overall industry environment, FET is the perfect match for KGT in terms of our business philosophy, committement to customers, focus on talents, and our visions for the future mobile business. KGT is very pleased to be able to reach agreement with FET on all merger-related issues in a short period of time. Both of us are highly confident about our furture performance and will commit to expediting business integration to realize synergies early on, and bring premium quality mobile services and products to all customers in Taiwan."

The transaction is technically structured in two stages in order to ensure undisrupted services for KGT subscribers. In step 1, a newly established subsidiary of FET, Yuan Ho Telecommunications ("Yuan Ho"), will assume all KGT assets and liabilities, and complete the business integration. During this phase, FET and KGT will set up a coordination committee, led by Jan Nilsson, President of FET, to oversee the integration process. In step 2, the merged company will complete a share exchange with FET.

Japan's DoCoMo, which holds 21.4% of KG Telecom has already agreed to the merger. Upon completion of the transaction, DoCoMo will become a 4.9% shareholder in Far EasTone."

Posted to the site on 8th October 2003