Mail Stop 3561
July 27, 2005
Tan Ho Chen
Chunghwa Telecom Co., Ltd.
21-3 Hsinyi Road, Section1, Taipei
Taiwan, Republic of China
Re: Chunghwa Telecom Co., Ltd.
Registration Statement on Form F-3
Filed July 6, 2005
File No. 333-126417
Dear Mr. Chen:
We have limited our review of your filing to those issues we
have addressed in our comments. Where indicated, we think you
should
revise your document in response to these comments. If you
disagree,
we will consider your explanation as to why our comment is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure. After reviewing this information, we may raise
additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
* * * * *
1. Please file on EDGAR the correspondence, dated July 13, 2005,
submitted by Simpson Thacher.
2. We note the reference to "the property issue of Taiwan Telecom
Association" contained on page 2 of the July 7, 2005 complaint
letter
from the Chunghwa Telecom Workers` Union provided to us by your
legal
counsel. Tell us in your response letter why this issue has not
been
discussed in the registration statement.
3. We note that the July 7, 2005 letter from the Chunghwa Telecom
Workers` Union mentions embezzlement of funds by the former
chairman
of Chunghwa Investment Ltd. Co. We further note a Taiwan News
article, dated March 25, 2005, that discusses the former
chairman`s
embezzlement of NT $100 million. In your response letter, please
describe the consideration given to disclosing in the registration
statement the embezzlement and its impact on the company. In this
regard, we note your Form 6-K, dated April 14, 2005, indicates
that
the embezzlement created "no material impact." In your response
letter, provide us with an analysis supporting this conclusion.
Implications of Our Privatization, page 2
4. Please quantify the estimated amount of the company`s severance
obligations. We note that you have already funded substantially
all
of the company`s share of these obligations.
Risk Factors, page 7
We face opposition to our privatization, and this offering may be
subject to legal or other challenges, page 7
5. Certain press articles indicate that a petition to stop the
privatization has been filed with the Grand Justices. Please
update
the disclosure accordingly.
6. Please describe the possible material adverse effects arising
from
the complaint filed with the Taipei District Public Prosecutor`s
Office. Your revised disclosure should describe the effects with
greater specificity and clarity.
7. Explain the phrase "open tender" as it is used in the first
paragraph of this risk factor.
8. Please refer to the third and fourth full paragraphs of this
risk
factor. Describe in greater detail the possible "material adverse
effects" arising from the various challenges to the offerings and
privatization described here. For example, explain how successful
challenges to the validity of the offerings will affect the
validity
of the offered securities and describe any resulting negative
consequences. Your revised disclosure should give readers a
better
sense of the magnitude of the risks resulting from the challenges
to
the offerings and privatization.
Our business and operations will be subject to extensive
regulations
applicable to state-owned enterprises in the Republic of China...,
page 8
9. Please refer to the last sentence of this risk factor. Explain
more clearly why there is no assurance that the company will be
privatized upon the completion of the offerings. Describe the
reasons why, even if the offerings are completed, the company may
not
be privatized.
If we fail to maintain a good relationship with our labor
union...,
page 8
10. If known, please indicate whether the company currently
expects
that its future collective agreement with the labor union will
result
in "higher costs." Indicate, if known, the extent to which these
costs will be higher than the current levels. For example, we
note
the company`s plans to distribute earnings to employees, as
described
on page 63. When describing the effects of the higher costs,
avoid
the generic phrase "material adverse effect" and use clearer
language
instead.
We may not enjoy the benefits of privatization..., page 8
11. Please refer to the last sentence of this risk factor. Please
describe in greater detail the consequences if the company fails
to
retain its status as a privatized company as a result of open
market
purchases by the government.
Our actual pension obligations..., page 9
12. Please describe in greater detail how the challenges to the
offerings and the privatization could result in a significant
increase in your actual pension obligations.
We depend on select personnel and could be affected by the loss of
their services, page 13
13. Please discuss how the company`s efforts to privatize and the
resulting labor union problems could affect the risks described
here.
For example, discuss whether the labor union problems could
increase
the risk of the company losing "skilled technical and other
personnel" and describe the effect of such risk.
The Ministry of Transportation and Communications may transfer its
shareholding in our company..., page 13
14. The current risk factor discussion is overly vague. Please
revise to explain in detail the negative effects that the
described
transfer would have on the company and its investors.
Resolutions Passed by the Legislative Yuan, page 85
15. Please revise to state that Chang & Chang has provided the
company with an opinion regarding the effects that the Legislative
Yuan`s resolutions may have on the offerings and their
interpretations of the resolutions described on pages 85-86.
Please
provide us with a copy of the opinion as an appendix to your
response
letter.
16. Please discuss the company`s plans if the challenges to the
offerings are successful. Indicate whether the company will
continue
with its privatization and offerings if, for example, the Grand
Justices rule in favor of the union`s petition. Discuss the
impact
that a cessation of the privatization will have on the company and
investors. Describe the remedies available to purchasers of the
ADSs
if the offerings are invalidated.
Enforceability of Civil Liabilities, page 98
17. Describe in the risk factors section any material risk to
investors related to the enforcement of civil liabilities, as
disclosed in this section, if the current offerings are challenged
or
invalidated. This risk factor disclosure should include
discussion
of any need to obtain foreign exchange approval for any amounts
recovered as a result of the judgments.
Signatures, page S-1
18. Please have the company`s controller or principal accounting
officer sign the registration statement.
Exhibit 5.1
19. Please refer to paragraph 3 of the first page of the opinion.
Revise to state that the "Taxation - Republic of China Taxation"
section constitutes the opinion of Baker & MacKenzie, not merely
that
it "accurately reflects" the material tax consequences.
20. Please refer to the last paragraph of the opinion. Please
delete
the term "solely" and phrase "...or relied upon by any person or
entity other than the person to whom it is addressed." It is
inappropriate to include any language that implies investors are
not
entitled to rely on the opinion or limits the persons who may rely
on
the opinion.
* * * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities Act
of
1933 and that they have provided all information investors require
for an informed investment decision. Since the company and its
management are in possession of all facts relating to a company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
? should the Commission or the staff, acting pursuant to
delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
? the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
? the company may not assert staff comments and the declaration
of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
Please contact Ted Yu at (202) 551-3372 or me at (202) 551-
3810
with any other questions.
Sincerely,
Larry Spirgel
Assistant Director
cc: Chris Lin
Simpson Thacher & Bartlett LLP (via fax)
??
??
??
??
Tan Ho Chen
Chunghwa Telecom Co., Ltd.
July 27, 2005
Page 1