Foxconn to buy a $390m stake in Taiwan telecom operator in 4G push

Apple Inc supplier Foxconn Technology Group will buy a stake in Taiwan mobile telecom operator Asia Pacific Telecom for NT$11.6 billion ($390 million) in a deal that would expand its presence in Taiwan's fledgling 4G telecom market.

Foxconn, which is listed on the Taiwan stock market under the name Hon Hai Precision Industry Co, would pay NT$20 a share for 582.9 million shares in Asia Pacific via a private placement, both companies said in stock exchange filings on Tuesday.

Asia Pacific and a unit of Foxconn are then expected to merge fully via a share swap, pending agreement on terms, by June 20.

The deal comes as Foxconn is branching out into new areas including software and cloud computing, in addition to 4G services.

Foxconn has previously won one of the licenses to operate part of Taiwan's 4G spectrum, which is expected to begin service later this year.

"The deal should definitely benefit Hon Hai as they move into 4G, though it could be as long as seven years before they see any real profit from their entry into the field," said Fubon Securities analyst Arthur Liao.

Earlier this month, Asia Pacific had said it would soon decide on a merger with either Foxconn or Taipei-headquartered noodle maker Ting Hsin International.

Foxconn will purchase Asia Pacific under its subsidiary company Ambit Microsystems, the unit responsible for its future 4G deployment, the stock exchange statement said.

Ambit will be dissolved and the new company will operate under the name Asia Pacific Telecom.