Taiwan Cellular Corp (TCC) has said it is in talks to buy regional mobile operator MoBiTai in a deal which will see it leapfrog state-owned Chunghwa Telecom as the largest service provider in Taiwan’s saturated mobile market. TCC has signed a memorandum with electrical appliances group Teco to acquire the latter’s 67% stake in MoBiTai in an all-cash deal worth TWD2.45 billion (USD75 million). The purchase is set to be finalised in July, after which TCC has said it will look at the possibility of acquiring the remaining 33% of shares in a stock swap with Teco and MobiTai’s remaining investors.
TCC’s acquisition of MobiTai will give it badly needed coverage in the central region of Taiwan. It will also serve to dampen rumours of a merger between TCC and much larger rival KG Telecom. Both operators are keen to reduce their costs in the build-up to launching third-generation (3G) mobile services later this year and, to this end, began merger talks in October 2003. However, the deal foundered after the two operators were unable to agree terms.
Taiwan is home to the most heavily saturated mobile market in the world, with penetration reaching more than 113% at the end of 2003. At that date leading operator Chunghwa had 8.267 million customers and a market share of 33%, ahead of TCC with 8.011 million subscribers and 32%. MoBiTai is currently part of the country’s third largest operator FarEasTone, which bought the central Taiwanese operator in 2000. At the start of 2004 Far EasTone claimed 5.141 million connections, ahead of fourth-placed KG Telecom (part owned by Japan’s NTT DoCoMo) with 3.67 million.