China Mobile will pay $533 million to take a landmark 12% stake in Taiwan carrier FarEasTone.
It is the first direct Chinese investment in Taiwan since the Communist Party came to power on the mainland in 1949.
The deal, which will require approval from authorities on both sides, comes as cross-strait ties continue to warm under the new Taiwan President Ma Ying-jeou.
New PRC laws will take effect from May 1, allowing Chinese companies to invest directly in Taiwan.
Under the terms announced yesterday, China Mobile will pay NT$17.77 billion (NT$40.00 per share) in a private placement for 444,341,020 new shares. The price is 15% above FarEasTone\'s closing price on the Taiwan Stock Exchange on Tuesday.
The two carriers said they would cooperate closely in procurement, roaming, data and value-added services.
China Mobile said it hoped to offer more customized services to customers traveling across the strait as well as business enterprises operating on the mainland and in Taiwan.
Far EasTone will need the approval of the Taiwan Stock Exchange, the National Communications Commission, and the Mainland Affairs Council. China Mobile will require assent from State Council, MIIT, the State-owned Assets Supervision and Administration Commission and the Taiwan Affairs Office.
China Mobile is the world\'s largest carrier, with 477 million subscribers. FarEasTone is Taiwan\'s third largest cellco, after Chunghwa and Taiwan Mobile. SingTel has a 4.1% stake in the company.