05.10.2001
Taiwan Cellular acquires TransAsia, secure as local wireless leader

• Taiwan Cellular Corp. (TCC, 4901 'Tai Wan Da') is to buy 97% of regional rival TransAsia Telecommunications Inc. (unlisted) for NT$13.5b, or NT$39.9 per share. TransAsia will remain a separate company and will list on the local stock market (4Q01 at the earliest). TCC's purchase of TransAsia will further consolidate the local wireless industry.

• The acquisition will secure TCC in its leadership position in wireless telecommunication and boost subscriber numbers to over 6m from around 5.5m. Main rival Chunghwa Telecom (2412 'Zhong Hua Dian') has 5m subscribers. Average Revenue Per User (ARPU) will also improve on the back of TransAsia's higher ARPU. The buy-in has the added benefit of keeping a lid on Far EasTone's (unlisted) expansion plans as Far EasTone had itself been holding negotiations with TransAsia since last year in the hope of acquiring the company.

• TCC believes the acquisition will strengthen its ability to provide next-generation wireless broadband services.

• VB Primasia Investment Opinion: Aside from entrenching TCC's leadership in the domestic telecommunication market, we expect the acquisition of TransAsia will help the company secure a seat in the bidding for a 3G license. We recommend a LONG-TERM BUY on TCC.

AngelLo@Primasia.com +886-[0]2-2547-8865