Foxconn’s 4G License in Taiwan Kicks Off Asia Expansion Plans

November 1, 2013 Leave a comment

Foxconn’s 4G License in Taiwan Kicks Off Asia Expansion Plans

Foxconn Technology Group’s purchase of mobile-phone spectrum in Taiwan is the next step in Chairman Terry Gou’s plan to move past contract manufacturing and become a global mobile content and services provider. Ambit Microsystems Corp., a wholly owned unit of Foxconn’s Hon Hai Precision Industry Co. (2317), paid NT$9.18 billion ($312 million) for 20-megahertz of wireless bandwidth at auction, the National Communications Commission said yesterday. Winners have 120 days to pay their license fees and are then required to submit a business plan to the regulator. The successful bid marks Gou’s first foray into the telecommunications business since he founded the company 39 years ago.“Getting a 4G license is part of Foxconn’s long-term plan to go beyond manufacturing to offer a full range of services,” Simon Hsing, spokesman for Taipei-based Hon Hai, said in an interview yesterday. “Taiwan will be a showcase for us to prove that we can offer integrated hardware, software, content and services.”

Securing wireless spectrum means Foxconn will set up a 4th-generation mobile-phone services business in Taiwan, adding to a deal announced in June to develop software and hardware for Mozilla Corp.’s Firefox mobile operating system. Broadening to more locations may allow Foxconn to tap into a global market for mobile data which Bloomberg Industries estimates will grow 50 percent annually until 2018.

Six companies paid a total of NT$118.65 billion for a total of 135MHz of bandwidth in 12 lots, the NCC said yesterday. The most-expensive lot was bought by Chunghwa Telecom Co. (2412) for NT$25.69 billion.

Boosting Margins

Chunghwa, the former state-owned operator, secured a total of 35MHz for NT$39.1 billion while incumbents Taiwan Mobile Co. (3045) and Far EasTone Telecommunications Co. (4904) got 30MHz each and two smaller companies 10MHz apiece.

“Foxconn has done very well for a newcomer by securing a relatively large amount of bandwidth at a good price,” said Praveen Menon, a Hong Kong-based analyst at Bloomberg Industries.

Foxconn’s next targets for telecommunications licenses will probably be in Asia, specifically among Asean markets, Hsing said. Foxconn is still in talks with the government and local partners on possible manufacturing investment in Indonesia, he said.

Foxconn, whose Hon Hai unit gets as much as half its revenue from making Apple Inc.’s iPhone and iPads, plans to hire as many as 3,000 software engineers at a research facility in Kaohsiung, Taiwan, it said in June.

Hon Hai yesterday also announced plans to take a 45 percent stake in a venture with Hong Kong-based online game developer NetDragon Websoft Inc. and Shanghai-based private-equity fund Vision Knight Capital. The $33 million company plans to develop hardware, software and tablets for China’s education market, Laura Liu, a spokeswoman for Hon Hai, said.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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