With local demand for broadband Internet service on the decline, Chunghwa Telecom Co (中華電信) is hoping to boost user numbers by cutting prices for asymmetrical digital signal line (ADSL).
Analysts say the move may not work because most customers that want the service already have it.
"We hope to lure more customers to connect to ADSL, so starting from July 1, Chunghwa will offer a big-scale promotion," Hochen Tan (
The state-owned telecom giant will cut the monthly charge for ADSL by 16 percent, from NT$595 to NT$499.
One market pundit said price cuts are critical for the market's development.
"The market demand for ADSL service is not as strong as last year, therefore companies need to offer some incentives," said Lee Ya-ping (李雅萍), a broadband market analyst at the Institute for Information Industry (資策會).
The nation's broadband or high-speed Internet user number reported its most significant growth in the last quarter of 2001, or a jump of 23.6 percent to 1.14 million compared to 0.9 million in the previous quarter.
"However, in the first quarter of this year the growth rate declined to only 7.6 percent," Lee added.
With most people interested in having broadband Internet services, such as Internet heavy users or online game players, having already subscribed, the future market development is limited, she explained.
As of March, Taiwan had a total of 2.26 million broadband Internet users, a 7.6 percent increase from the 2.1 million users last December.
Comparing with the nation's 10.55 million Internet users, current broadband penetration rate is nearly 22 percent.
The move by Chunghwa is expected to force competitors such as Sparq (速博電信), Taiwan Fixed Network Corp (台灣固網) and Eastern Broadband Telecommunications Co (東森寬頻) to cut ADSL charges later this year.
Yesterday Taiwan Fixed Network also announced it would cut ADSL fees, starting July 1, from NT$595 to NT$499 per month -- matching the Chunghwa rate.
Lee estimated by year-end the nation's broadband-user number may reach 2.8 million.
Meanwhile, Chunghwa reiter--ated that it plans to sell 13.8 percent of the company's shares in the form of American Depositary Receipts next month.
Company executives will hold a road show to promote the ADR to at least six nations starting next week.
"In an effort to convince foreign investors to buy Chunghwa shares, starting on Wednesday several Chunghwa executives will have face-to-face meetings with potential investors," Hochen said.
Hochen has scheduled trips to Singapore, Hong Kong, Japan, Switzerland, the UK and the US over the next five weeks.
"I am very confident about the ADR sales because Chunghwa has proved it is a money-making company," he said.
Chunghwa reported a NT$176 billion in sales or NT$43.2 billion net profit last year and the company is expected to generate NT$177.4 billion in sales or NT$42.8 billion net profit this year.
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