Wed, Aug 11, 2004 - Page 11 News List

Ratings steady for phone firms

STAFF WRITER

Taiwan Ratings Corp (中華信評) yesterday affirmed its twA+ long-term corporate credit rating and twA-1 short-term credit rating for both Far EasTone Telecommunications Co (遠傳電信) and Taiwan Cellular Corp (台灣大哥大), the rating agency said in separate statements.

The outlook on these two companies' long-term ratings is stable, Taiwan Ratings, the local arm of Standard & Poor's Ratings Service, added in the statements.

Taiwan Ratings said the rating for Taiwan Cellular reflects the company's leading position in the nation's mobile telephony market, its good operating margins, stable cash flow and satisfactory financial profile.

Taiwan's wireless telecommunications market has experienced significant consolidation.

In July 2001, Taiwan Cellular acquired southern-based operator Trans Asia Telecommunications (泛亞電信) and in June of this year announced the acquisition of Taichung-based Mobitai Communications (東信電訊). As of May 31, Taiwan Cellular, together with TransAsia and Mobitai, had 8.1 million mobile-phone subscribers in Taiwan, representing a market share of 35 percent.

That figure compares with the 35 percent share that state-owned Chunghwa Telecom Co (中華電信) controls and the combined 30 percent share that Far EasTone and KG Telecommunications Co (和信電訊) control.

In April 2004, Far EasTone completed the acquisition of KG Telecommunications.

Taiwan Ratings expects the consolidation trend will help Taiwan Cellular maintain its leading market position amid less acute competition in terms of tariff rates and handset subsidies.

However, since the penetration rate in Taiwan's wireless telecommunications market exceeds 100 percent, Taiwan Ratings expects the market growth rate to fall below 10 percent over the next two to three years.

Taiwan Cellular has changed its investment policy as regards its shareholdings in Chunghwa Telecom. Taiwan Cellular, together with TransAsia, sold 122 million shares in Chunghwa Telecom in January, leaving it with a stake of 312.57 million shares in its major competitor.

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