Taiwan Mobile has agreed to acquire one of the country´s leading pay-television operators from Carlyle Group, the US private equity fund, in a $1bn cash and stock deal.
The takeover of Kbro, which is subject to regulatory approval, will create Taiwan´s largest provider of phone, web and TV “convergence” services.
It also comes as the island´s TV viewers rapidly switch to digital services, which offer higher margins for operators.
Carlyle will receive cash of just NT$440m ($12m) and 589m shares, or a 15.5 per cent stake in Taiwan Mobile, the country´s second-largest phone carrier. The buyer will also assume about $800m of Kbro´s debt.
The US fund stressed yesterday its long-term commitment to its stake in Taiwan Mobile, where it will become the second largest shareholder after the country´s Tsai family. “We are looking forward to making Taiwan Mobile a bigger, better company,” said Gregory M Zeluck, a Carlyle managing director.
Taiwan Mobile´s cable-TV unit is its fastest growing division but boasts a market share of only 6 per cent, which will rise to 32 per cent after the takeover. The combined cable-TV business will have 1.6m customers, making it the country´s largest provider.
Analysts said the deal would give Taiwan Mobile economies of scale and throw down the gauntlet to rival providers, one of which is owned by MBK Partners, a Korean-based private equity fund, and another by Australia´s Macquarie Media Group.
Jason Wang, managing director of Cypress River Advisors in Taipei, said: “Taiwan is a great market. There´s a large middle class. It´s a perfect market for both content and advertising.”