Taiwan to Liberalize Phone Market, Foreign Ownership (Update1)
Bloomberg News
May 18, 1999, 2:37 a.m. ET
Taiwan to Liberalize Phone Market, Foreign Ownership (Update1)
(Adds official comment and background; rewrites.)
Taipei, May 18 (Bloomberg) -- Taiwan may allow foreign firms
to control telephone companies for the first time, tripling a cap
on foreign ownership to 60 percent, as it prepares to join the
World Trade Organization.
''Taiwan will have to open its telecommunication market
after entering into the WTO anyway, so now is time to establish
some ground rules,'' said Lin Fong-Chi, a spokesman for the
Transportation and Communications Ministry. Taiwan hopes to join
the trade body by the end of this year.
At a meeting today, parliament will consider a proposal from
the ministry that raises the limit from 20 percent. The only
exception would be state-controlled Chunghwa Telecom Co., the
dominant telephone company, whose limit would remain at 20
percent.
In a further move, Taiwan will grant licenses at the end of
this year for private companies to enter the fixed-line telephone
service market for the first time. That market has annual sales
of NT$92.3 billion ($2.8 billion).
Among possible bidders: MCI WorldCom Inc., which may team up
with Taiwan's second-largest carmaker, Yulon Motor Co., according
to local newspapers. President Group, Far Eastern Group and Koo's
Group may jointly cooperate with British Telecommunication Plc or
Bell Canada, the local press reported.
China Rebar and Denver-based U.S. West Inc. will form a
joint venture seeking to offer fixed-line service, while Pacific
Electric Wire & Cable Co., a member of the Iridium satellite
phone network, will also apply for a license, the Commercial
Times reported.
Chunghwa Telecom is now the sole provider of fixed-line
phone service in Taiwan. Since 1997, it has competed with half a
dozen other companies in mobile services, including Koo's Group's
KG Telecom and Far Eastern Group's Far EastTone.
Under the new licensing system, details of which will be
announced later this week, qualifying bidders must raise at least
NT$10 billion to apply for a license. Successful bidders must
raise at least NT$40 billion and build 150,000 phone lines before
offering their services commercially.
Taiwan's Koo's Group, China Rebar Group and three other
groups will apply for the fixed-line phone licenses, said Mao Chi-
kuo, vice minister of transportation and communications.
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