Chunghwa Telecom betting on ADSL, other services

Chunghwa Telecom Co's (中華電信) business will continue to grow thanks to the contribution of its value added and asymmetric digital subscriber line (ADSL) Internet connection services, the nation's No. 2 mobile operator said yesterday.

"We believe the expansion of the mobile customer-base has helped boost the use of value-added services. And we expect sales from this area will take off in the future," Chunghwa Telecom Chairman Hochen Tan (賀陳旦) told reporters yesterday.

Sales from value-added services -- including data messaging, picture transmission, ring tone and game downloads -- rose to about NT$1.67 billion during the January to September period for the year, accounting for only 1.24 percent of the company's sales of NT$133.9 billion during the same period.

The value-added services contributed merely 0.009 percent to the phone company's sales in calender year 2002.

During the first nine months the telecom giant earned NT$36.4 billion, or after-tax earnings per share of NT$3.77.

The profits accounted for 84 percent of its forecast NT$42.84 billion for this year. Chunghwa Telecom profited NT$4.0 a share last year.

"Value-added services are definitely a primary driving force for local mobile phone operators, as demand in data transmission is gathering steam," said Justin Lin (林友銘), an analyst with MasterLink Investment Advisory Co (元富投顧).

The opinion of George Wu (吳裕良), an analyst with Primasia Securities Co, however, is a far cry from the perspective for the local telecom industry.

"I don't expect a boom to come soon for data masseging or value-added services since there's bumpy way to go before the realization of 3G service," Wu said.

The company's mobile subscribers exceeded 8 million users this month, closely tracking behind Taiwan Cellular Corp's (台灣大哥大) 8.6 million users.

Subscription for the company's ADSL service also exceeded 2.4 million people as of this month, and the figure is expected to grow to 2.5 million by the end of the year, company president Lu Shyue-ching (呂學錦) said.

Lu attributed the increase partly to the growth in the number of ADSL subscribers.

Sales generated from ADSL services reached NT$15.45 billion during the first nine months, accounted for 11.5 percent of the telecom operator's revenue.

Currently, more than 500,000 users have signed up with the company's ADSL service, he added.

Apart from its core business, Chunghwa is also branching into the offering of multimedia-on-demand (MOD) service, aiming to boost its bottom line.

Chunghwa Telecom is attempting to provide such new services in the near future after problems with rates and cooperation with cable operators to supply programs, Hochen said.

"With MOD service at hand, our customers will be able to choose what movies they want to see just as if they walked into a video-rental store," Chunghwa Telecom senior vice president Chang Feng-hsiung (張豐雄) said.

This is very different from the service existing cable operators provide," Chang said.

Chunghwa Telecom is scheduled to test the MOD service equipment as early as December, he said without elaborating.

Chunghwa shares closed unchanged at NT$51.5 on the TAIEX yesterday.

The company's shares have surged 7.5 percent this month.