Taiwan Cellular hopes to lift profits by 10 percent

Taiwan Cellular Corp (台灣大哥大), the nation's biggest provider of mobile-phone services, said it will cut costs to meet its goal of boosting full-year profit by about 10 percent.

The Taipei-based company posted net income of NT$14.9 billion on NT$58.7 billion of sales last year.

"Changes will come in a couple of months when we understand the competitive situation," Daniel Tsai (蔡明忠), the acting chairman, said in an interview after the annual shareholders' meeting. He did not give specific numbers.

Taiwan Cellular said it may cut its holding in rival Chunghwa Telecom Co (中華電信), the nation's biggest phone company, as well as stakes in non-core businesses to reverse a more than 10 percent slide in last year's net income. Settling loans Taiwan Cellular drew for such investments will help cut interest costs, some analysts said.

"It's good Taiwan Cellular is increasing its focus on its core business," said Dominic Grant, an analyst with INB Securities Ltd, who has a "hold" rating for the shares.

Taiwan Cellular's net debt last year more than tripled to NT$54.6 billion from 2001, raising the debt-to-asset ratio to 47 percent from 29 percent a year earlier.

In December, Taiwan Cellular paid NT$27.7 billion to buy 550 million shares in Chunghwa Telecom. It joined Cathay Life Insurance Co (國泰金控) and Fubon Financial Holding Co (富邦金控) to take combined 13.5 percent stake for NT$65.6 billion.

Tsai, who's also vice chairman at Fubon Financial, Taiwan's second-largest financial services company, said he intends to be elected chairman of Taiwan Cellular. Fubon Financial owns 17 percent of Taiwan Cellular.

While Taiwan Cellular's shares have lost more than 28 percent in the last 12 months, Chunghwa Telecom gained almost 5 percent.

Taiwan Cellular will delay the start of a service that will allow users to download information and video clips from the Internet at about 10 times the speed of older networks.