Two of Taiwan’s five wireless players , FarEasTone and KG Telecom, have finally agreed to merge, in a deal which is expected to be completed by March 2004. In preparation for the merger, FarEasTone is expected to create a new subsidiary known as Yuan Ho Telecommunications, which will take over all KGT assets and liabilities from 1 January 2004. A share exchange is planned for 15 March, which will complete the merger. According to the terms of the deal FarEasTone will pay TWD11.7 billion in cash and 806 million of its shares for KG. Each KG shareholder will receive TWD6.72 in cash and 0.46332 FarEasTone shares for every KG share.
The deal has the approval of NTT DoCoMo, which owns 21.4% of KG; the Japanese cellco has signed an MoU with FarEasTone to collaborate on i-mode and 3G services. DoCoMo will end up with a 4.9% stake in the enlarged company; it has not commented on whether it will raise its holding. The boards of KG and FarEasTone have approved the tie-up and a shareholders meeting has been set for 25 November to give the merger the final green light.