This $528 million deal between is the first major business deal between companies on the Mainland and Taiwan since cross-strait relations started to thaw last year.
The deal is about the two companies combing to improve and extend each other business.
A source close to the deal says that China Mobile is interested primarily in the strategic benefits, rather than control, and that the company is unlikely to try to increase its stake in the target.
In the filing, China Mobile said that the agreement will help the company expand its business on the mainland China and in Hong Kong and Taiwan, since it will be able to offer better services to its customers who are part of the growing traffic across the strait.
Another benefit of the deal is technology.
China Mobile said it will allow it to ‘better explore future technological trends in the mobile communications market and accumulate advanced technological and operational expertise in areas such as 3G and next generation technology, since Taiwan is in a more advanced stage of development in both 3G-technology applications and value-added services.’ In other words China Mobile will end up with phones like that illustrated, the Mitsubishi M430i i-mode handset rather than the clunky TD-SCDMA handsets it has now.
Technology exchange relating to 3G is of notable importance to China Mobile since it has beenlumbered with TD-SCDMA,China’s first high-speed mobile telecoms network.
Finance Asia referred to an industry overview which Merrill Lynch reduced its ratings for the Taiwanese telecom sector. The note said that the impact from the tough macroeconomic environment was taking more of a toll than initially expected.
In fact, this is, mainly about something else entirely. China Mobile has been told it will use the new China standard TD-SCDMA which is a good idea in that you do not have to pay royalties. And not such a good idea in that it still requires some development work. With this deal China Mobile gets access to a large collection of extremely expert engineers. What the deal does is make TD-SCDMA work.