Hon Hai Precision Industry Considers Acquiring Stake in Asia Pacific Telecom

2014-05-05
Published : May-2014

According to sources Taiwan-based manufacturer Hon Hai Precision Industry Co Ltd which is famous for making iPhones for Apple Inc is currently in talks to acquire 22 percent of Asia Pacific Telecom Co Ltd, a Taiwanese mobile network provider.

Taiwan’s Commercial Times reported that the deal will be worth $464.48 million (T$11 billion to T$14 billion) and will represent all Asia Pacific Telecom stock which is held by government-owned enterprises.

Any deal would come after both Asia Pacific Telecom and Hon Hai had won licenses to provide 4G services (fourth-generation mobile communications services) on a network widely expected to come online this year.

Hon Hai, which is the largest contract manufacturer of electronic goods in the world, had bid for 4G licenses after its chairman, Terry Gou said that he wanted Hon Hai to diversify from pure manufacturing as sales of wide-margin smartphones such as the iPhone slows across the globe.

According to data from researcher IDC, this year the smartphone market is likely to grow 19 percent from 39 percent in 2013.

Hon Hai would gain access to 3,000 wireless base stations and 2.1 million subscribers after purchasing Asia Pacific Telecom, whose market value is T$ 49.88 billion.

Vincent Chen, Yuanta Securities analyst said that any deal would not be a game-changer for the company. Chen added that Asia Pacific Telecom’s profitability is only satisfactory and not great.

A spokesman for Hon Hai Precision said that the company hoped to offer 4G services as soon as possible and was open to all forms of cooperation. Asia Pacific Telecom and Hon Hai spokesman declined to comment about the acquisition.

Hon Hai shares were 0.1 percent higher, while Asia Pacific Telecom shares gained 5.3 percent in morning trade on Monday.

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