TAIWAN: Richard Li seeking China Network stake, report says

The youngest son of Hong Kong's richest man Li Ka-shing plans to fork out NT$24 billion (US$733 million) to secure a 60 percent stake in Taiwan's biggest cable TV operator China Network Systems Co, according to a media report.

Showing his determination to branch out into Taiwan, Richard Li, chairman of Hong Kong's biggest phone operator PCCW Ltd, will visit Taiwan this week with plans to pay NT$45,000 per subscriber to outbid its rivals, according to a report by the Chinese-language Commercial Times yesterday.

Macquarie Media Group, Newbridge Capital, Carlyle Group and Goldman Sachs are reportedly interested in bidding as well.

China Network currently has 1.1 million subscribers, with a 26.2 percent market share. The firm has planned to sell shares owned by Taiwan's Koos Group and the Hong Kong-based Star Group Ltd in a package deal, and has hired Morgan Stanley as its financial consultant, the report said.

Denial

PCCW, however, denied the report yesterday, saying the company has never contacted China Network regarding the share purchase, according to the Central News Agency (CNA).

The company also refused to comment on whether the story related to a personal investment by the younger Li, the CNA said.

On July 10, Li sold a 22.66 percent stake in PCCW to Hong Kong financier Francis Leung for HK$9.2 billion (US$1.2 billion). Last week, Li took a 50 percent stake in the Hong Kong Economic Journal through a trust company he owns. A source close to the deal put the price at between HK$200 (US$26 million) and HK$300 million.

A government official yesterday said there would be no problem for Hong Kong companies to invest in Taiwanese firms.

Legal

Emile Chang, deputy executive secretary of the Investment Commission under the Ministry of Economic Affairs, said Hong Kong investments in Taiwanese firms are deemed legal transactions according to the Provisions Governing Relations with Hong Kong and Macau.

After the bidding concludes, the commission will examine the winning firm's shareholders to make sure that there is no Chinese capital behind them, he added.

Over the past year, the nation's cable TV sector has seen dramatic changes with foreign groups entering the market.

Sydney-based Macquarie Media, Australia's biggest commercial radio operator, agreed in December to buy Taiwan Broadband Communications from Carlyle for A$1.19 billion (US$890 million), giving it a 12 percent market share. The US buyout firm bought Taiwan Broadband in 1999 for about US$200 million.

Carlyle in late June received a green light from the Fair Trade Commission to buy a majority stake in Eastern Multimedia Co and 12 of its cable television affiliates. The deal is priced at NT$47.6 billion.