Taiwanese regulator NCC has reportedly rejected the merger proposal between Asia Pacific Telecom (APT) and Hon Hai affiliate Ambit Microsystems due to insufficient information.
The NCC has turned down the application on the grounds that it fails to adequately explain the scope and methods of the proposed deal, the China Postsaid.
According to the regulator the application also raises legal concerns over internet roaming arrangements.
APT and Ambit have been asked to resubmit their application to provide more details of the proposal.
The two operators arranged to join forces in June with the goal of jointly providing 4G services over Taiwan Mobile's network. APT launched 4G services over the network in December.
But the NCC recently launched an investigation into whether the deal between Taiwan Mobile and APT violates telecom and antitrust laws.
Rival operators Chunghwa Telecom, Far EasTone and Taiwan Star have strongly opposed the agreement, and have asked the NCC to look into whether the deal breaks Taiwan's Telecommunications Act.
APT is offering 4G services at a cheaper rate than Taiwan Mobile, so the deal could also violate Taiwan's Fair Trade Act.