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China Mobile Terminates Taiwan M&A

Ray Le Maistre

Four years after announcing plans to invest in Taiwan's third-largest wireless operator, China Mobile Ltd. has announced that the deal has been terminated because, in its words, some of the required conditions have not been met. In April 2009, China Mobile announced an agreement to buy a 12 percent stake in Far EasTone Telecommunications Co. Ltd. in a deal valued at more than US$500 million. (See China Mobile Enters Taiwan.) The Chinese giant, it seems, was confident that the Taiwanese government would relax the restrictions imposed on investments made by companies from mainland China. And, according to this Bloomberg article, while the investment limits have been changed for other sectors, the telecom sector is another matter, due to national security concerns. So now the deal is off and has been replaced instead by a "business cooperation framework agreement … to jointly explore opportunities to continue broad-based cooperation in a number of areas in mobile telecommunications businesses," according to a China Mobile statement. But the Chinese giant hasn't given up on its plans to invest in Eastone: "Upon Taiwan laws and regulations opening up the class 1 telecom services sector for investments by Mainland China funded enterprises, the parties may reconsider the possibility of equity cooperation," it notes. What this tale tells us is that when it comes to national security, telecom networks and the information held in Service Provider Information Technology (SPIT) systems are regarded as just about the most sensitive assets within a country's boundaries. — Ray Le Maistre, Editor-in-Chief, Light Reading

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