Wed, Oct 05, 2005 - Page 10 News List

Mobile companies hunt new profits

ON TARGET The nation's cellphone service providers are looking forward to a huge increase in subscribers and profits after the official local launch of 3G services yesterday


The general manager of Taiwan Mobile, Harvey Chang, center, with Sony Ericsson Taiwan area manager Steven Yeh, left, and Samsung general manager Jeon Yong Sung, at a press conference yesterday at Taipei's Formosa Regent Hotel to officially launch 3G mobile services in Taiwan.


In Taiwan's stable telecom market, Taiwan Mobile Co (台灣大哥大) and its competitors are searching for new growth areas for revenues, and third-generation (3G) business opportunities could be a boon to them, an analyst said yesterday.

"Revenues will increase after they launch new 3G telecom busi-nesses. But the growth potential is still uncertain, as 3G technology only grants wider bandwidth rather than enriches applications," said Daniel Hsiao (蕭黎明), an analyst with Taiwan Ratings Corp (中華信評), a local arm of Standard and Poor's.

Taiwan Mobile, the nation's third-largest mobile-services provider, yesterday said that new 3G business applications will start to significantly boost its revenues next year as the number of subscribers soars.

However, the contribution from 3G business to the ARPU (average revenue per user) will be limited in the early stages as the 3G customer base is still small, Taiwan Mobile president Harvey Chang (張孝威) said yesterday.


"But this contribution will become significant after the amount of 3G subscribers rise,as expected, to 15 percent to 20 percent of total mobile-services users," Chang said, without giving further details.

Taiwan Mobile will likely soon see the ARPU jump significantly, Chang said, as the 3G subscribers base will rapidly grow to 1 million users next year, which would be about 16 percent of its current 6.2 million customers.

Taiwan Mobile said the ARPU rose to around NT$800 to NT$900 recently.

In 2007, 3G users on Taiwan Mobile's accounts will grow to 2 million, Chang said.

The mobile carrier expects to snare 100,000 sign-ups for its 3G services, Catch3, by the end of this year. Taiwan Mobile now has over 10,000 mobile users that tried out its 3G services after a soft launch in May.

The 3G services allow users to make video calls, watch televisions on their mobile phones and download ringtones or pictures from the Internet about eight times faster than on less advanced second-generation (2G) technology.

Chang declined to comment on 3G services' negative impact on Taiwan Mobile's margin. He said only that his company will meet its financial projections for the third quarter.

Profits rise

Taiwan Mobile said pre-tax profits will rise slightly by 0.7 percent to NT$4.94 billion in the July-to-September period from NT$4.9 billion in the previous three months, according to the company's forecast submitted to the Taiwan Stock Exchange.

Earnings per share will also inch up to NT$0.92 from NT$0.88, according to the forecast.

As mobile operators raise handset subsidies and increase marketing spending to attract users interested in switching to 3G services, margins will shrink, Taiwan Ratings's Hsiao said.

"But, the margin decline won't be drastic in the short term, as Taiwan's telecom operators are now only in the initial phases of offering 3G services," Hsiao said.

He expected their margins to shrink by single-digit percentages in the fourth quarter.

Shares of Taiwan Mobile fell 14 percent on the Taiwan Stock Exchange since the beginning of the year, to NT$29.95 yesterday.

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