China Mobile faces stiff opposition to Taiwan deal

China Mobile must clear stiff legal and political hurdles if it is to succeed in buying a stake in Taiwan operator FarEasTone.

The industry regulator, the National Communications Commission (NCC), and the Mainland Affairs Council (MAC) have said the investment breaches Taiwan’s Telecom Law.

Pro-independence law-makers have also expressed opposition to the deal, which would be the first direct investment in Taiwan by a mainland company in 60 years.

Hong Kong-listed China Mobile, the world’s biggest cellco, announced on April 29 it planned to take a 12% stake in FET. It offered NT$40 per share, valuing the deal at $533 million.

The investment was announced ahead of the introduction of new mainland laws allowing Chinese companies to invest directly in Taiwan.

However, Fu Don-cheng, a vice-chairman of the MAC, which oversees Taiwan’s mainland relations, said the council had “no plans” to allow investment in “Type 1”, or basic telecom services, reported  Friday.

He said the rules might be eased to allow investment by mainland firms in “Type 2”, or value-added services.

At a hearing yesterday, lawmakers attacked FET for ignoring the NCC and using the deal to pump its stock price, Taiwan’s Public TV Service reported .

China’s telecom law only permits investment in core telecom services by state-controlled carriers.