FarEastTone, one of the big three operators, elbowed aside Taiwan Mobile to announce a 20-year business cooperation and spectrum sharing deal with APT.
The smaller operator will pay NT$9.473 billion (US$323.8 million) for a two-ninths share of FarEasTone's 3.5GHz spectrum, the operators revealed on September 4.
FarEastone will make an immediate NT$5 billion ($170.9 million) investment in APT to take an 11.6% holding. It has committed to increasing its stake to 23.8% by June 2022, making it the second-largest shareholder behind electronics giant Hon Hai.
It is the first 5G spectrum sharing deal since the regulator, National Communications Commission, announced it would allow sharing in the 3.5GHz band. The deal will require NCC approval, however.
FarEasTone's president, Chee Jing, said the operator's 3.5GHz resources were sufficient to support frequency sharing and still maintain network quality and user experience.
She said that as a result of the APT deal, FarEasTone would be able to "improve spectrum efficiency, reduce network costs and invest resources to further develop 5G."
APT, which pulled out of the January spectrum auction, and with less than 10% of the mobile market, had been widely expected to forge an alliance with one of the big players.
But the likely partner was anticipated to be Taiwan Mobile, which leases its 4G network to APT's MVNO service and holds a 2.55% stake in the company.
The new alliance puts pressure on FarEasTone's arch rival Taiwan Mobile, which had been in talks with APT on expanding its existing agreements.
It took a gamble in the spectrum auction of acquiring just 60MHz in 3.5GHz frequencies, well short of the 90MHz and 80Hz acquired respectively by Chunghwa Telecom and FarEasTone.
Just last month, President Jamie Lin told an earnings call that smaller operators needed network sharing arrangements because they would be unable "to offer the same network quality" without additional funding.
Now attention turns to Taiwan Mobile and whether it will come to terms with the fifth operator, Taiwan Star, which launched its 5G service last month.
Lin said in a letter to employees last week that while analysts had warned Taiwan Mobile that it was constrained by its smaller 5G spectrum holdings in the wake of the FarEasTone-APT deal, the average spectrum per user between the two groups was now aligned.
However, on a per-user basis, the operator with the greatest spectrum is Taiwan Star, which has 2.4 million customers – around 8% market share – with a 40MHz slice of 3.5GHz spectrum.
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— Robert Clark, contributing editor, special to Light Reading