Tue, Sep 27, 2005 - Page 10 News List

Chunghwa sees revenue increase

By Lisa Wang  /  STAFF REPORTER

Chunghwa Telecom Co (中華電信), Taiwan's biggest phone company, yesterday said its annual revenue would expand by up to 5 percent over the next four years, helped primarily by its new businesses, including third-generation (3G) mobile services.

The remarks came almost one month after the telecom operator completed its latest 17 percent share sale overseas and at home in mid-August, as part of the government's plan to trim its stake to below 50 percent.

That has given the phone company greater flexibility in forming market strategies to cope with Taiwan's competitive telecom market, said chairman Hochen Tan (賀陳旦) in a statement released yesterday.

The growth areas are its new businesses.

"Boosted by our new 3G mobile services, broadband and MOD [multimedia-on-demand] business, the new Chunghwa Telecom will have 3 to 5 percent annual growth in sales," Hochen said.

That would bring the revenues to more than NT$200 billion within the next four years, Hochen said with confidence.

"Profits will also increase accordingly, but we didn't set any target," company spokesman Hank Wang (王漢朝) said.

"That is a very aggressive target as Chunghwa Telecom is losing growth momentum in its main telecom business, while new businesses are expanding slowly," said Lu Chia-lin (呂家霖), an analyst with Yuanta Core Pacific Securities (元大京華證券).

The company's mobile services and multimedia-on-demand business, which delivers TV signals using high-speed ADSL technology, are the new growth areas, and will offset its sagging fixed-line business, Lu explained.

The 3G services are expected to lift the company's revenues only by single digits, while the fixed-line area, which accounted for 35 percent of the operator's total revenue, is facing continuing declines of around 8 percent in sales a year due to intensive competition from latecomers, Lu said.

"It will be an uphill task for the operator to hit the projected 3 to 5 percent revenue increase a year. I believe Chunghwa Telecom will only have stable revenues and earnings in the following years, except the 3G services would contribute more significantly than I thought," Lu said.

He said Chunghwa Telcom's revenues for 2005 may drop slightly to NT$180 billion, compared to NT$182 billion last year. Earnings for this year would also edge down to NT$49.77 billion, or NT$5.16 a share, from NT$49.87 billion.

For the first half of the year, the company's net profit fell 7.8 percent from the same period a year earlier to NT$24.33 billion. Revenues declined to NT$89.72 billion from NT$90.82 billion.

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