Chunghwa plans China alliance

17 Apr 2007

The Financial Times and Reuters are reporting that Chunghwa Telecom is planning to enter China through indirect investment in a small local operator and by teaming up with one of the mainland’s fixed line networks in 3G mobile services. State-controlled Chunghwa expects Chinese-language data content to be a major future growth driver. However, Taiwan’s government heavily restricts telecom investment in politically hostile China. Hochen Tan, Chunghwa chairman, told the Financial Times that the telecoms company intends to offer itself as a partner to China Telecom and China Netcom once the two mainland operators obtain 3G licences. The two networks saw their voice revenue drop last year, and believe the 3G licences could offer an important opportunity for them to regain profitability by adding mobile services to their eroding fixed line business. Mr Hochen said in order to chase China Mobile and China Unicom, the mainland’s incumbent mobile operators, the two fixed-network companies would need expertise in the development, pricing and marketing of 3G content. ‘Although the Taiwan market is much smaller than China’s, there are similarities in our habits, our language, our stories,’ he said.

The plan is at odds with Taiwan government regulations, which does not allow the island’s telecoms operators to invest in the industry in China or offer services there. But Mr Hochen said he had started to lobby the government on relaxing the restrictions. ‘It will be a window. Once it closes, there will be no other big good opportunities,’ he said.

China, Taiwan, Chunghwa Telecom