Hon Hai remits NT$7 billion back to Taiwan for 5G development

11/22/2019 04:25 PM
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Taipei, Nov. 22 (CNA) Hon Hai Precision Industry Co., the world's largest contract electronics maker, has remitted NT$7 billion (US$230 million) to Taiwan from overseas to increase its stake in subsidiary Asia Pacific Telecom Co.

In a statement released Thursday, Hon Hai said it will use the funds to push its initiative to develop 5G technology through Asia Pacific Telecom.

The announcement came after Hon Hai, also known as Foxconn in the global market, said last week it would invest NT$10 billion in Asia Pacific Telecom by participating in the company's private placement to buy 1 billion new Asia Pacific shares.

It was not clear if the NT$7 billion remitted was part of the NT$10 billion it said it would invest or to be used for another purpose.

The company also did not identify from where the funds were remitted, but it did say it was taking advantage of a newly revised law that took effect in mid-August encouraging Taiwanese firms to move their retained earnings held overseas back to Taiwan.

The revision allows retaining earnings to return and have them taxed at a low preferential tax rate rather than at the standard corporate income tax rate.

The originally planned NT$10 billion investment would increase Hon Hai's stake in Asia Pacific Telecom, one of Taiwan's five major telecom operators, to 40.74 percent from the current 19.70 percent.

Hon Hai said its efforts in 5G technology development, consisting of heavy investment in equipment, are expected to help Asia Pacific Telecom upgrade its facilities to meet its needs in a future 5G environment.

That investment should help upgrade Taiwan's research and development capabilities to build a better communications network.

Taiwan's government has designated 2020 as the first year of the 5G era and is planning an auction of the 5G spectrum that will start later this year.

All five major telecom operators have signed up to participate in the 5G tender, and Hon Hai is teaming up with Asia Pacific Telecom to improve its chances in the auction.

Hon Hai said the two companies will continue to invest in building broadband communication facilities, with plans to start to invest in mobile broadband technology in January 2020 and complete construction of a mobile broadband network in two years.

Hon Hai's 5G plans are part of its overall bid to re-engineer itself from a pure hardware manufacturer into a tech company integrating its manufacturing capabilities with resources to develop software.

(By Chung Jung-feng and Frances Huang)


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