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Telcom plans to buy Far EasTone stake

CHINA Mobile plans to invest US$527 million for a stake in a Taiwan-based telecommunications firm as it seeks expansion in overseas markets, the company said yesterday.

The deal requires regulatory approval. If it succeeds, it will be the first time a Chinese mainland firm has directly invested such a large amount in a company on the island.

China Mobile plans to buy US$527 million (NT$17.8 billion) worth of the stakes, 12 percent of Far EasTone Telecommunications Co, Taiwan's third-biggest phone company by revenue. The sum was a 14-percent premium to Far EasTone's closing share price of NT$35.20.

The tie-up will facilitate China Mobile's expansion globally and help it provide more comprehensive services both in the domestic and global market, according to China Mobile's Chairman Wang Jianzhou.

"China Mobile is likely to continue seeking opportunities for overseas acquisitions," said Sandy Shen, a Shanghai-based analyst at consulting firm Gartner.

China Mobile has become the world's No. 1 mobile carrier but 99 percent of its revenue is from the domestic market and "that's not how it should be," Shen said.

Other global wireless giants such as Vodafone have joint ventures in at least 10 countries.

From this year to 2011, China Mobile has earmarked 375 billion yuan (US$54.96 billion) for capital expenditures, despite the global recession.

A strategic stake purchase in Far EasTone will enable China Mobile to better explore future technological trends.

Taiwan is in a far more advanced stage of development in terms of both third-generation technology applications and value-added data services, China Mobile said in a statement.



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