Taiwan to Issue 5 Licenses by the End of the 2001

date: August 28, 2001

Taiwan's Ministry of Transportation and Communications has decided to announce publicly the "Regulation of 3G Cellular Phone Services Management" in September.

The move is expected to set the basic principles for 3G license competition, and could make sure how many telecommunication companies will apply for 3G licenses after preparation for more than one year.

According to MOTC sources, after the announcement of the regulation, MOTC will immediately accept applications from business concerns. 3G license applications will expire by the middle of November. MOEA is expected to announce the eligible company lists in earlier December, after initial qualification review. The selected companies then should proceed in the bidding process, mainly centering on the construction price. If the bidding process proves to be smooth, MOEA is expected to announce the final successful bidder lists by the end of December.

MOEA is now in the process of reviewing the 3G license issuing regulation. Sources confirmed that, in principle, MOEA is expected to release five licenses for 3G cellular phone services, with a 15-year validity period. The successful bidder should put IMT-2000 land cellular phone service system equipment as one of their choice for both voice and none voice cellular phone services.

Successful bidders should present tender bonds for acquiring the "establishing certificates," which will be valid by the end of 2004, with a one-year extension period to assure the construction of related 3G equipment. In other words, successful bidders should gain their charter license after the completion of related infrastructure.

Formal operation of the 3G business should be announced after the acquisition of the license. If there is a failure to handle the schedule requirements, the tender bond offered by a successful bidder will be confiscated by MOTC. The bidder also will retreat from any further moves.

MOTC sources revealed that successful bidders should raise at least NT$6 billion, the paid-in capital requirement for a 3G company, within the valid establishment period. In addition, they have to complete at least 250 ground stations for their 3G operation.

MOTC officials indicated the bidding price is in the nature of the chartered fee. As far as the frequency usage fee is concerned, 3G operators will submit the usage fee to MOTC's Directorate General of Telecommunications by the end of 2003.

According to the MOTC plan, both existing mobile phone service companies and new applicants can bid for the licenses. The license fee, estimated to be at least NT$12 billion, can be paid in 14 years after license winners make down payments equivalent to 10 percent to 20 percent of the total cost in the form of a tender bond.

MOTC's move signaled that the ministry will honor its earlier promise to liberalize the 3G telecom service licenses by the end of the year, generally regarded as a necessary move as Taiwan's entry into the World Trade Organization is approaching.

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