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Deal approved by Far EasTone

CHINA Mobile Ltd's plan to buy a 12-percent stake in Far EasTone Telecommunications Co was approved by the Taiwan-based mobile operator yesterday.

The deal, which still needs approval from regulators on both sides of the Taiwan Strait, is expected to be the first case of direct investment from a Chinese mainland firm into Taiwan.

FET shareholders agreed to sell up to 444 million new shares, worth up to NT$17.7 billion (US$527 million), to China Mobile.

"We're asking shareholders to approve the China Mobile investment because this strategic cooperation is the right direction for the company," Far EasTone's Chairman Douglas Hsu said during the annual meeting of Taiwan's third-largest mobile-phone operator.

The deal was announced in April, and represents the equivalent of 12 percent of Taipei-based FET's total shares.

The tie-up will facilitate China Mobile's expansion and help it provide more comprehensive services, said China Mobile's Chairman Wang Jianzhou.

NTT DoCoMo Inc and Singapore Telecommunications Ltd also each hold about 4 percent of the Taiwan-based carrier.

"It's unclear whether the addition of another strategic partner as well as DoCoMo and SingTel would do much to improve FET's core operations, given the firm's operational execution has been erratic over the past couple years," said John Kim, a Merrill Lynch analyst.

He was also skeptical that there would be a meaningful increase in roaming revenue for FET as China Mobile's preferred partner as the average number of visitors from the mainland to Taiwan was only 35,000 a month in the fourth quarter.



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