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China Mobile Enters Taiwan

Catherine Haslam
News Analysis
Catherine Haslam
4/29/2009

China Mobile Ltd. (NYSE: CHL) has agreed to acquire a 12 percent holding in Far EasTone Telecommunications Co. Ltd. , Taiwan's third-largest operator, through a new share issue valued at NT$17.77 billion ($530 million) in total or NT$40.00 ($1.2) per share.

On completion of the deal, the two companies will begin a strategic alliance from which China Mobile hopes to use Far EasTone's experience in rolling out 3G technology, applications, and value-added data services.

Taiwan is one of the world's most mature 3G markets, and 3 million of Far EasTone's 6.2 million subscribers are on the company's 3G network. It was the first in Taiwan to launch 3.6-Mbit/s HSPA in October 2006, and it holds a WiMax license.

The companies also agreed to work together on procurement, roaming, data and value-added services, and network and technology advancement, including research and development on communication standards for future technical developments.

This announcement comes just three days after mainland China and Taiwan agreed on terms for mainland companies to invest in Taiwan, and China Mobile states that it will use the relationship to improve services to businesses and individuals that operate in both mainland China and Taiwan.

China Mobile has two other ventures outside mainland China. It acquired Hong Kong's Resources Peoples Telephone Company Limited in 2006 and took a controlling stake in Paktel in Pakistan in 2007.

This is Far EasTone's fourth alliance with a major international operator, having previously worked with AT&T, NTT Docomo, and SingTel.

— Catherine Haslam, Asia Editor, Light Reading

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