China Mobile will acquire a 12% holding in Far EasTone Telecommunications, Taiwan’s third-largest operator, through a new share issue valued at $530 million in total or about &1.2 per share.
China Mobile hopes to use Far EasTone’s experience in rolling out 3G technology, applications and value-added data service, as China prepares to invest much in 3G technology. The company has recently signed a contract with LG to supply 3G smartphones and another contract with Alcatel-Lucent to provide the necessary 3G equipment and support.
China Mobile has a good reason to enter Taiwan, as the country has one of the world’s most mature 3G markets and 3 million of Far EasTone’s 6.2 million subscribers. Far EasTone was the first in Taiwan to launch a 3.6 Mbit/s HSPA in October 2006 and also owns a WiMax license. China Mobile has another two ventures outside the regulation reach of the Chinese government. It acquired Hong Kong’s Resources Peoples Telephone Company Limited in 2006 and also owns Paktel in Pakistan since 2007.
Far EasTone also has experience in working with foreign operator. The company has previously worked with AT&T, NTT Docomo and Singtel.