Thu, Feb 27, 2003 - Page 11 News List

Chunghwa eyes NT$44.7 billion profit


Chunghwa Telecom Co (中華電信) may post profit of NT$44.7 billion (US$1.3 billion) this year, said Capital Securities Corp (群益證券), arranger of the government's March sale of a 1 percent stake in Taiwan's dominant phone operator.

That would be 7 percent above 2002 unaudited profit and 14 percent above the NT$39 billion mean profit estimate of nine analysts in an IBES survey. The arranger's forecast contrasts with an earlier government budget report predicting as much as a 22 percent decline in Chunghwa profit this year.

The island's largest fixed-line phone company and No. 2 mobile-phone operator by customers may report sales of NT$178 billion this year, Capital Securities said in a statement.

A Chunghwa Telecom official says the company expects to report 2003 net profit lower than the 2002 level.

"Our sales this year are likely to show a year-on-year increase but our operating costs and other expenses may prove higher as well," the official said on condition of anonymity.

Chunghwa expects demand for wideband Internet service and rising cell phone customers to boost profit this year, company president Lu Shyue-ching (呂學錦) said.

Taiwan is scheduled to offer 1 percent, or 100 million shares, in Chunghwa to local investors between March 3 and March 5 as part of its plan to get the government out of the telecommunications business. The government now owns 81.5 percent of the company.

To sweeten subsequent government stake offerings, Chunghwa Telecom may introduce an early retirement program to lower costs and a share buyback to boost per-share earnings and dividends, company chairman Hochen Tan (賀陳旦) said.

Chunghwa Telecom, facing competition from new fixed-line and mobile phone operators, may face a profit decline next year. Net income may drop to NT$41.7 billion on sales of NT$178.27 billion, Capital Securities said. Unaudited profit last year rose 16 percent to NT$43.3 billion, or NT$4.48 a share.

Chunghwa shares, which ended trading today before the forecasts were announced, were unchanged at NT$52, after plunging almost 9 percent the past two weeks. The shares are trading at almost 13 times expected 2003 earnings.

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