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Last updated: August 24, 2005 5:04 pm

Chunghwa job cuts to save NT$4bn annually

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Chunghwa Telecom, the Taiwanese group privatised this month, plans to cut its workforce from 28,000 people to 25,000 over the next three years.

The reduction in staff will cost the company about NT$2.5bn (US$78m), but will save around NT$4bn a year, Ho Chen Tan, chairman and chief executive, said on Wednesday.

In an interview, Mr Ho Chen said the privatisation of Chunghwa, which was fiercely contested by some lawmakers and workers, was a critical turning point that would free the company from bureaucratic controls.

Taiwan’s Ministry of Transportation and Communications reduced its stake in Chunghwa from 65 per cent to 48 per cent through an overseas and domestic share sale.

A 14 per cent stake was sold in a US$2.56bn American Depositary Share (ADS) offering just ahead of the ex-dividend date.

Around 45 per cent of the offering was placed with investors in Asia, 34 per cent with investors in the US and 17 per cent with those in Europe, according to UBS, one of the underwriters.

Mr Ho Chen confirmed that the Taiwan government’s eventual goal was to reduce its stake to about 34 per cent, but said it was highly unlikely that additional share sales would take place this year.

Chunghwa’s privatisation was preceded by months of intense opposition, primarily from legislators opposed to selling state assets so cheaply and union employees worried about losing jobs and benefits.

But some industry experts argue that Chunghwa is now well poised to streamline its operations and become more competitive.

Mr Ho Chen said executives no longer had to report to legislative committees regularly, or wait for government approvals on budgetary and expenditure matters.

Chunghwa no longer has to follow strict civil servant pay scales, which is likely to mean more lay-offs and greater bonus incentives for those who perform well, he said.

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