Tue, Jul 13, 2004 - Page 11 News List

Chunghwa Telecom profits up 2%

THE SOUND OF MONEY Chunghwa Telecom's second quarter profits posted up a modest 2 percent as competition keeps a cap on growth

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Chunghwa Telecom Co (中華電信), Taiwan's largest phone company, had a 2 percent increase in second-quarter profit as the company's sales stagnated in a market that has more mobile-phone subscriptions than people.

Net income rose to NT$13.4 billion (US$398 million) from NT$13.1 billion a year ago. The second-quarter figures were derived from first-half profit numbers released by the Taipei-based company in a faxed statement. Sales, reported earlier, rose 2.3 percent, to NT$45.8 billion.

For the first half, profit was NT$26.3 billion, or NT$2.73 a share, the company said, citing unaudited figures.

The company posted a profit of NT$23.9 billion in the same period a year ago.

Limited growth

Chunghwa sales growth is limited by competition for mobile and fixed-line users in an already saturated market.

In the first half, revenue from fixed-line domestic services fell 5.6 percent and from international calls 11.4 percent, the statement said.

Chunghwa "growth isn't high, due to high penetration in Taiwan's fixed-line and wireless phone markets," Kevin Yang, fund manager at International Investment Trust Co (國際投信), said.

Yang sold his Chunghwa shares in the second half of last year for stocks with higher growth prospects.

Yang expects Chunghwa Telecom profits to fall slightly in the second half because of fierce competition.

Taiwan has more mobile subscriptions than people because of multiple accounts by some users in the nation of 23 million.

Sales of mobile-phone services rose 7.7 percent in the first half to NT$34.6 billion, making it Chunghwa Telecom's biggest service.

Government selloff

The government plans to accelerate work on the sale of a NT$85 billion stake in Chunghwa as it wants to ease budget deficits. The gap between spending and revenue this year is expected to climb to NT$257 billion. The government plans to sell about NT$540 billion worth of assets.

A plan to sell a 14 percent stake in Chunghwa Telecom was canceled last year after the company's workers' union opposed a buyback plan proposed to help boost earnings per share. Chunghwa Telecom chairman Ho chen-tan (賀陳旦) said last month the company had revived plans to buy back and cancel as much as one-tenth of its stock, worth NT$55.5 billion at the time.

Chunghwa Telecom shares were unchanged yesterday at NT$58. The stock has gained 17.7 percent this year, compared with a 2.2 percent decline on the TAIEX.

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