November 27, 2019
Hon Hai Precision, the parent of iPhone manufacturer Foxconn, is boosting its stake in mobile operator Asia-Pacific Telecom (APT) ahead of the Taiwan 5G auction.
The company, the world's fourth-largest ICT company and biggest contract manufacturer, is tipping NT$10 billion ($328 million) into APT to take its share of the small operator from 19.7% to 40.7%.
The investment is part of a push into 5G by Hon Hai as it diversifies away from its core manufacturing business.
Foxconn employs approximately 800,000 people in China, India, Vietnam and elsewhere, including 350,000 in a central China factory that makes half the world's iPhones.
Hon Hai, which reported $170 billion in revenue last year, wants to transform itself into a technology services company, and is plotting investments in emerging fields such as electric vehicles and digital health. It sees 5G, AI and robotics and automation as the key underlying technologies of its new business.
Hon Hai's fresh investment in APT comes just ahead of Taiwan's 5G spectrum auction, set to start on December 10.
Hon Hai execs told a briefing in Taipei on November 13 the company is already working on 5G technology with APT, with joint licenses to run trials in several locations in northern Taiwan. The two companies have also partnered with Intel and Taiwan's National Chiaotung University to build early 5G applications.
APT is the smallest Taiwan operator, with an estimated 2.03 million subs, or about 7% of the market. It will need Hon Hai's deep pockets when the auction gets underway.
The National Communications Commission has set a target of at least NT$30 billion ($982 million) from the spectrum sale.
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It will be offering offer a total of 2790MHz: 20MHz in the 1800MHz band, 270MHz in 3.5GHz and 2,500MHz in 28GHz.
The NCC has set floor prices of NT$24.3 billion ($784 million) for the 3.5GHz spectrum, and NT$3.2 billion ($104 million) and NT$2.5 billion ($82 million) respectively for 1800MHz and 28GHz.
APT is reported as saying it thinks the spectrum pricing is high by international standards. But Chee Ching, president of FarEasTone, one of the big three operators, said she believes the pricing will mean the auction will end more quickly.
Neighboring Hong Kong completed its 5G spectrum auction earlier this month, raising HK$1.911 billion ($244 million) from the sale of 380MHz in the 3.5GHz, 3.3GHz and 4.9GHz bands.
Operators in both markets expect to start commercial service in the middle of 2020. Chi-Mau Sheih, the chairman of Chunghwa Telecom, the largest Taiwan operator, has promised a July launch.
— Robert Clark, contributing editor, special to Light Reading
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