TOKYO-Japanese operator NTT DoCoMo Inc. looks to have stepped in to revive a merger between two Taiwanese mobile operators that was speculated to have fallen through. DoCoMo said it had agreed to a deal in which KG Telecommunications Co. will become a 100-percent controlled subsidiary of Far EasTone, and DoCoMo will hold 4.9 percent of FarEasTone.
DoCoMo is a 21.4-percent stake holder in KG Telecom, Taiwan’s third-largest mobile operator. KG Telecom does not hold a third-generation license, and the new agreement includes a memorandum of understanding between Far EasTone and DoCoMo to collaborate on W-CDMA and i-mode technologies in Taiwan.
Under the agreement, each KG Telecom share will be converted into 0.46332 Far EasTone shares plus 20 cents. DoCoMo will receive $74.8 million in cash.
KG Telecom already offers an i-mode service in Taiwan through its DoCoMo partnership. The merger of the two Taiwanese operators will allow the combined company to better compete with market leaders Chunghwa Telecom and Taiwan Cellular Corp., market watchers said.
Far EasTone first announced plans to buy KG Telecom earlier this year, but a long due diligence process delayed the deal. The deal is expected to be completed in March.
