Chinese telecom operator China Mobile has announced that its establishment of a subsidiary in Taiwan, Zong Co., has been approved and it plans to use the subsidiary to invest in the Taiwanese telecom operator, Far Eastone Telecommunications.

China Mobile reportedly applied for the establishment of this wholly-owned subsidiary in Taiwan via a special purpose company in the Netherlands in 2009.

Prior to the setting up of the company, China Mobile announced at the end of April 2009 that it signed an agreement with Far Eastone Telecommunications to acquire a 12% stake in the Taiwanese operator for HKD4.076 billion. However, the plan has remained in limbo as the island keeps its phone services providers off limits from Chinese mainland investment.

China Mobile's spokesperson said that the setting up of Zong will help shorten the transaction period between China Mobile and Far Eastone Telecommunications after the Taiwanese government lifts its bans on mainland investment in the Taiwanese telecom industry. It will also accelerate the cooperation between the two parties to provide better services to users on both side of the strait.

China Mobile said it hopes Taiwan can open mainland investors' investment in Taiwanese telecom operators. By then, China Mobile will apply to invest in Far Eastone Telecommunications via the newly established subsidiary.