Chunghwa Telecom (CHT) Privatization — National Interest vs. Market Sentiments: Between a Rock and a Hard Place

This case study is about the privatization of Chunghwa Telecom. During the privatization process, the governance structure of an organization changes rapidly. This case underlines the importance of the interactions between multiple stakeholders (i.e., government officials, the senior management team, the global coordinator, the financial advisors, etc.) involved in a high profile transaction and looks at how these interactions ultimately shape the pricing strategy of the proposed IPO. Pricing strategy for an IPO is based on objective financial and operational data. However, the interpretation of these data is subjective and biased by the risk/return profile of each stakeholder involved in the transaction. This study provides a unique perspective of the IPO process. First, it explores the human side of a transaction in which the stakes are high for all parties involved, an issue not often discussed in other cases. Other questions raised include: On what basis does a company select its financial advisors and its global coordinator? What are the ultimate, and sometimes contradictory, objectives of the parties with regard to the pricing strategy? Regarding this topic, based on the same financial data, various stakeholders with different objectives ultimately reach a different price range for the shares of this formerly state-owned enterprise.