Hon Hai and Taiwan Mobile in Mutual Investment Deal to Tap Telecom Biz

Hon Hai Group and Taiwan Mobile Corp. recently announced a mutual-investment partnership to tap the telecom market.

The partnership enables Taiwan Mobile, Taiwan's No.2 mobile-service provider by revenue, to acquire 5MHz of bandwidth from the Hon Hai-held 4G service provider, AMBIT Corp., for NT$3.4 billion (US$114.4 million) along with a 14.9% stake for NT$2.9 billion (US$99.3 million).

AMBIT owns 10MHz of bandwidth acquired via a bid for NT$6.8 billion (US$227 million), and will soon merge with Asia Pacific Telecom Co., Ltd., another 4G service provider, to boost the combined bandwidth of the two companies to 30MHz, which exceeds by 5MHz the ceiling 25MHz set by the government for  4G service provider.

The merger enables Taiwan Mobile to own 3.45% of the new entity to become the third largest shareholder, next only to Hon Hai and Taiwan Railway Administration.

Hon Hai will swap purchase 2% of Taiwan Mobile bonds for sizable capital.

The deal is rocking Taiwan's telecom market. According to Taiwan's industry executives, the deal embodies Hon Hai's strategy to enable AMBIT-Asia Pacific entity to provide dial-call service on Taiwan Mobile's network when it starts operation. AMBIT is expected to acquire the service license this October before merging with Asia Pacific.

Industry executives estimate the partnership to bring onboard for the two companies some 9.57 million customers of mobile network, optical-fiber network and cable TV network, including 1.5 million cable TV customers. And that the merged operation will be sufficiently big to threaten  Chunghwa Telecom Co., Ltd.,   Taiwan's No.1 telecom by revenue. In addition, the Hon Hai-Taiwan Mobile deal will push No.3 player Far EasTone Telecom to accelerate its strategic partnership with Taiwan Star Telecom Co., Ltd., founded by the Ting Hsin International Group. (KL)