The formerly state-controlled Chunghwa Telecom Co (中華電信) has technically become a private entity last week when the government's shareholding in the company dropped below 50 percent. But this does not necessarily mean the nation's biggest telephone services provider will immediately transform from a clumsy dinosaur to a streamlined modern giant, considering the number of internal and external challenges it is facing, analysts said.
The Ministry of Transportation and Communications, the com-pany's biggest shareholder, last week offloaded its 17 percent stake to domestic and overseas investors, thereby achieving the primary goal of privatization.
According to Chunghwa Telecom's share sale prospectus filed with the US Securities and Exchange Commission (SEC), privatization would exempt the company from certain regulations and legislative oversights on its budget, procurements and investments.
"The management and operational flexibility resulting from the elimination of these limitations will enable us to more rapidly and efficiently develop our business and respond to market changes while implementing cost-saving reforms," the document stated.
The outlook appears to be rosy. However, the company is still subject to government interference, although the degree of such intervention might decrease slightly, an analyst said.
"I don't think there will be any immediate impact or changes following the company's privatization, because the Ministry of Transportation and Communications remains the biggest shareholder," said Daniel Hsiao (蕭黎明), associate director at the Taiwan Ratings Corp (中華信評), the local arm of Standard & Poor's.
What's more, lawmakers can still demand that ministry officials be present in the legislature to answer questions regarding Chunghwa Telecom's operations, he said.
Even the telecom carrier itself admits that it remains in the shadow of the government's "significant influence" on certain corporate matters, including the election of directors and supervisors and the approval of dividends.
In addition, under the Telecommunications Act (電信法) and Chunghwa Telecom's articles of incorporation, the ministry has the right to subscribe to two of its preferred shares when the government owns less than 50 percent of its outstanding common shares, granting it the right to veto key issues on the board.
Hsiao said that while the telecom operator will reap the benefits in the long run with more flexible personnel arrangements and purchase decisions, the foremost task it faces now is to brace for upcoming industrial changes.
"No matter whether it's a state-owned or private company, Chunghwa Telecom -- like all its smaller competitors -- will be challenged by data-oriented third-generation (3G) technology and the number-portability policy to be implemented [in October]," he said.
"Number portability" will allow mobile users to switch service providers without changing their telephone numbers, as is currently required. This policy could trigger a wave of rate-slashing competition among the nation's five mobile operators, eroding their profits and reshuffling their market shares, according to a survey released by the Chinese-language weekly Business Today (
As of May, Chunghwa Telecom held a monopoly of more than 90 percent of
Taiwan's fixed-line market, or 13.3 million subscribers, and an 80 percent
share in the broadband Internet connection market, servicing 3.3 million
households. It also enjoys a nearly 40 percent share of the mobile-phone
market, with 8.1 million subscribers, according to the company's figures.
Whether and when Chunghwa Telecom will be dethroned or simply becomes more
competitive remains to be seen, but it will have to help employees adjust
their mindset and devise new structures and systems to better compete with
rivals at home and abroad, its former chairman said.
As its bonus system failed to reflect the quality of employees' work performance, it is imperative for the company to adopt a carrot-and-stick approach to boost efficiency, said Mao Chi-kuo (
It also needs to revitalize its manpower base by encouraging older workers to retire and hiring younger employees to rejuvenate operations and create new services, Mao said. The average age of the company's 28,000 employees is around 47 years.
Mao said Chunghwa Telecom should not be complacent about its performance in the nation's tiny market and should emulate SingTel, Singapore's leading telecom company, by expanding its territory overseas.
Following years of exploitation, SingTel has started making profits in
Australia, Indonesia, the Philippines and India. Seventy percent of its
revenues come from abroad and only 30 percent is generated at home.
"Internationalization is the route to take and will provide Chunghwa Telecom
with much-needed growth momentum. It will have to seize the opportunity and
quickly tap into potential markets outside Taiwan before it's too late," Mao
said.
purpose: Tesla’s CEO sought to meet senior Chinese officials to discuss the rollout of its ‘full self-driving’ software in China and approval to transfer data they had collected Tesla Inc CEO Elon Musk arrived in Beijing yesterday on an unannounced visit, where he is expected to meet senior officials to discuss the rollout of "full self-driving" (FSD) software and permission to transfer data overseas, according to a person with knowledge of the matter. Chinese state media reported that he met Premier Li Qiang (李強) in Beijing, during which Li told Musk that Tesla's development in China could be regarded as a successful example of US-China economic and trade cooperation. Musk confirmed his meeting with the premier yesterday with a post on social media platform X. "Honored to meet with Premier Li
Dutch brewing company Heineken NV on Friday announced an investment of NT$13.5 billion (US$414.62 million) over the next five years in Taiwan. The first multinational brewing company to operate in Taiwan, Heineken made the statement at a ceremony held at its brewery in Pingtung County. It also outlined its efforts to make the brewery “net zero” by 2030. Heineken has been in the Taiwanese market for 20 years, Heineken Taiwan managing director Jeff Wu (吳建甫) said. With strong support from local consumers, the Dutch brewery decided to transition from sales to manufacturing in the country, Wu said. Heineken assumed majority ownership and management rights
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Microsoft Corp yesterday said that it would create Thailand’s first data center region to boost cloud and artificial intelligence (AI) infrastructure, promising AI training to more than 100,000 people to develop tech. Bangkok is a key economic player in Southeast Asia, but it has lagged behind Indonesia and Singapore when it comes to the tech industry. Thailand has an “incredible opportunity to build a digital-first, AI-powered future,” Microsoft chairman and chief executive officer Satya Nadella said at an event in Bangkok. Data center regions are physical locations that store computing infrastructure, allowing secure and reliable access to cloud platforms. The global embrace of AI