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Chunghwa Telecom, Taiwan's largest phone services company, has admitted it will miss its end-of-the-month target date for an IPO, crushing hopes of a planned overseas share sale worth up to US$3.4bn and an end to delays in planned sell-offs of state-owned shares.
?Given the open questions with regard to employee benefits and other controversial issues, we cannot say that we have a time frame for the share sale right now,? said Hochen Tan, chairman, at the company's annual general meeting. ?Completing privatisation by July 1 is not our target.?
The government last month picked Goldman Sachs, Morgan Stanley and UBS to conduct an offering of American Depositary Receipts to sell a 14 per cent stake in the company.
Combined with a further 3 per cent to be sold in the domestic market, this would reduce Taipei's share to under 50 per cent, officially making Chunghwa a non-state business.
In March, Frank Hsieh, premier, told the Financial Times he was determined to implement the share sale by the end of June to avoid other telecoms offerings and to profit from the surge in Taiwanese shares afterMorgan Stanley Capital International raised the weighting of the island's stocks.
But Chunghwa's labour union has threatened to derail the offering through strikes, lawsuits and resolutions in parliament. Observers now warnthat the delay could cost the company and the government dearly on top of past delays. ?If they had done the deal [in 2000] the government could have bagged T$100 per share, but three years later, the price was down almost 50 per cent,? said a banker close to the planned sale.