TAIPEI (Reuters) – A problem over an indirect state shareholding that is stalling Carlyle Group’s $1 billion deal for a stake in mobile phone firm Taiwan Mobile (3045.TW) must be sorted out by the parties involved, a Taiwan regulator said on Wednesday.
Carlyle’s plan to exchange its stake in Taiwan cable TV company Kbro for 15.5 percent of Taiwan Mobile has run afoul of a law in Taiwan prohibiting state ownership of media bodies.
The problem is the city government of Taipei has an indirect interest in Taiwan Mobile via a stake in parent group Fubon Financial Holdings (2881.TW). Fubon’s controlling shareholder, the Tsai family, is Taiwan Mobile’s largest shareholder.
“It’s up to Fubon to fix the problem. How are they going to solve the problem of state ownership? How long would it take them to work it out? They should offer appropriate solutions,” said J. C. Chen, vice chairman of the National Communications Commission, Taiwan’s media and broadcasting regulator.
Chen, speaking after meeting Carlyle and Taiwan Mobile executives to discuss the deal, said it is likely they may consider resubmitting the bid later.
Carlyle and Fubon could not be immediately reached for comment.
“We are studying solutions to meet the requirements of the NCC,” said Josephine Juan, a Taiwan Mobile spokeswoman. She declined to say what the solutions might be.
Under the deal agreed last September, Taiwan Mobile will pay T$32.8 billion ($1 billion) and will assume T$24 billion of debt.
The companies have a June 30 deadline for completing the deal, which would create Taiwan’s largest pay TV operator. (Writing by Jonathan Standing; Editing by Lincoln Feast)