UPDATE 1-China Mobile to buy Taiwan telco stake in landmark deal

* China Mobile paying $529 mln for 12 pct of Taiwan telco

* Biggest telco tie-up ever between China, Taiwan

* China Mobile paying 14 percent premium for stake

(Updates to add details from co statement, background)

By Nerilyn Tenorio and Kelvin Soh

HONG KONG/TAIPEI, April 29 (Reuters) - China Mobile (0941.HK) said it was buying 12 percent of Taiwan's Far EasTone (4904.TW) for $529 million, in one of the biggest investments by a Chinese firm in Taiwan as ties warm between the former rivals.

China Mobile, the world's largest mobile carrier by users, will pay about T$17.8 billion or T$40.00 per share for the stake in one of Taiwan's top three telecoms carriers, it said in a statement on Wednesday.

The price would mark a 14 percent premium to Far EasTone's closing price of T$35.20.

The tie-up -- the first of its kind between Taiwan and a mainland China telecoms firms -- will facilitate China Mobile's expansion on the mainland, Hong Kong and Taiwan, and help it provide more comprehensive services, China Mobile said.

"The alliance will expand the solid foundation for both sides' business in the Greater China market," China Mobile chairman Wang Jianzhou said in a statement.

China Mobile has earmarked capital expenditure of 375 billion yuan ($54.96 billion) for 2009-2011, despite its warning that a deepening financial crisis would pressure subscriber growth as local competition gets tougher.

Chosen by Beijing to roll out a new third-generation (3G) network based on an untested, home-grown Chinese standard, the company said it would reach new users by providing services such as mobile Internet.

"The cooperation will enable the company to better explore future technological trends in the mobile communications market ... since Taiwan is in a more advanced stage of development in both 3G technology application and value-added date services," the statement said.

China Mobile reported in-line first-quarter net profit growth of 5 percent, despite a near double-digit rise in revenue.

China has claimed self-ruled Taiwan as its territory since the end of the Chinese civil war in 1949 and pledged to bring the island under its rule, by force if necessary.

But once-icy ties have improved dramatically in the last year under the year-old China-friendly administration of Taiwan President Ma Ying-jeou.

Over the weekend, China and Taiwan signed a series of landmark agreements, including one allowing their financial services firms to invest in each others' markets. [ID:nTP347498].

China also said on Tuesday it has established rules allowing its companies to invest in Taiwan from May 1. [ID:nPEK179426] ($1=HK$7.750=6.823 yuan) (Additional reporting by Alison Leung; Editing by Doug Young and Mike Nesbit)