TAIWAN said on Friday it has given the go-ahead for China Mobile to open a subsidiary on the island, making it the first mainland telecom firm to establish a foothold there.

China Mobile, the world's largest mobile phone operator by users, plans to sell electronics materials wholesale, according to its application filed late last year.

However, the Taipei-based Commercial Times said the mainland firm was aiming to use the subsidiary to take a stake in Far Eastone Telecommunications, one of Taiwan's leading cell phone operators. No mainland capital has previously been allowed for investment in local fixed line, cell phone and satellite operators.

China Mobile said in April last year it hoped to invest in Far Eastone, aiming to buy a 12 per cent stake for about NT$17.8 billion (S$785 million). Far Eastone was not immediately available to comment.

The economics ministry said on Friday the rules would have to change before China Mobile would be able to buy into Far Eastone.

Taiwan and China have been governed separately since the end of a civil war in 1949 but Beijing considers the island part of its territory and has vowed to get it back, by force if necessary. However, tensions have eased markedly since Taiwan President Ma Ying-jeou took office in 2008 on a China-friendly platform.

source:straitstimes