Money Matters - Simplified

Taiwan Mobile to acquire Carlyle's cable TV business

Taiwan Mobile Co. Ltd. provides cellular telecommunication services in Taiwan. The Company also sells and leases cellular phones

Taipei, Taiwan, September 16 -- Taiwan Mobile Co. is acquiring a local cable television operator from Carlyle Group L.P. in a deal that will give the U.S. private equity firm a 15.5 percent stake in the telecommunications group, according to several tabloid reports.

According to Forbes, Taiwan Mobile, the country’s second-largest cellular phone operator, has agreed to pay 32.8 new Taiwan dollars ($1 billion) to acquire Washington-based private-equity firm Carlyle Group’s Taiwanese cable TV business.

A wise attempt to reach people other than wireless subscribers
The mobile carrier said in a statement on Wednesday that it will acquire cable television operator Kbro Co. from Carlyle Group, as well as majority ownership in 12 service operators and 49 percent stakes in two other service operators, Forbes reports.

"By doing this we are able to acquire direct access to over 1 million households in urban areas," Forbes quoted Taiwan Mobile President Harvey Chang as saying in a conference call with investors and analysts Wednesday. "We'll beef up our gross momentum and increase our revenue share."

According to Reuters, Carlyle Group and Taiwan Mobile struck a $1 billion deal on Wednesday, which will create Taiwan's largest pay TV operator.

The report says that Carlyle will exchange its stake in Taiwan cable company Kbro for a 15.5 percent stake in Taiwan Mobile, while the mobile-phone services provider will pay T$32.8 billion ($1 billion) via a share swap and cash. It will also assume T$24 billion of debt.

"This is not an exit for us," Reuters quoted Carlyle Managing Director Gregory Zeluck as telling a news conference. "We continue to be confident in the Taiwan market, and hope to help Taiwan Mobile become a bigger player in the industry."

The deal values Taiwan Mobile at NT$55 a share, representing about a 5 percent premium to its closing price of NT$52.50 on Wednesday.

According to Forbes, 79-year-old billionaire Wan-tsai Tsai along with his sons currently controls Taiwan Mobile, holding an 18.2 percent shareholder stake. The Tsai family has a net worth of $4.2 billion. Once the transaction completes in November this year, Carlyle will become the second biggest single shareholder, with 15.5 percent stake in the mobile phone company.

A bit on Kbro Co.
Formerly known as Eastern Multimedia Co, Kbro Co. was acquired by Carlyle Asia Partners II, a $1.8 billion fund managed by Carlyle, in July 2006, according to Carlyle's Web site. Between 2006 and 2007, Carlyle had invested an aggregate of $1.5 billion in Kbro Co., which currently has 12 CATV systems, including Kuan Sheng CATV, North Taoyuan Cable TV and Hsin Taipei Cable TV, with more than 1,100,000 subscribers.

Taiwan Mobile Co., Ltd. provides cellular telecommunication services in Taiwan. The company also sells and leases cellular phones.

J.P. Morgan Chase & Co. is advising Carlyle on the deal.