Rivals unfazed as Chunghwa rates drop

After the nation's top cellphone operator, Chunghwa Telecom Co (中華電信), yesterday announced that it would cut mobile-to-fixed-line voice rates by as much as 15 percent, its two biggest rivals said that they were in no rush to follow suit.

Major rivals Far EasTone Telecommunications Co (遠傳電信) and Taiwan Mobile Co (台灣大哥大) said that their current prices are similar to the reduced rates that were announced by Chunghwa Telecom.

Under pressure from the government, Chunghwa Telecom said yesterday that it will lower its fees for calls from mobile phones to fixed-line phones in a range between 3 percent and 15 percent, or by an average of 7 percent.

The new rates will take effect on Dec. 1, the company said in a statement.

Chunghwa Telecom completed its privatization in August, but the government still holds a controlling 48-percent stake in the company after the Ministry of Transportation and Communications offloaded its 17-percent stake in the telecoms operator to domestic and overseas investors.

"We are closely monitoring the responses of mobile users. Currently we don't see any reason to make a price adjustment," said Alison Kao (高治華), a spokesperson for Far EasTone Telecommunications Co, the nation's second-largest mobile service provider.

"As long as we charge rates that are similar to, or even lower than those of our rivals, we are not worried about losing subscribers," Kao told the Taipei Times.

Taiwan Mobile also said that its tariffs are similar to those being offered by Chunghwa Telecom.

"We are not following suit," said Josephine Juan (阮淑祥), a spokesperson for Taiwan Mobile.

Chunghwa Telecom will charge NT$0.14 per second for subscribers using its "288" package, which makes up the biggest share of the company's customer base. This is the same rate being charged by Far EasTone and Taiwan Mobile.

"The rate cuts should not have a significant impact on the mobile carriers' bottom lines, but we are concerned that the rate reduction will trigger a price war in other areas of the mobile business," said senior analyst Daniel Hsiao (蕭黎明), who tracks Taiwan's telecoms market for Taiwan Ratings Corp (中華信評), a local arm of international ratings agency Standard & Poor's.

"We are not worried about a possible reduction in sales, as, based on our past experience, the price cuts will stimulate usage," said Chen Chang-rong (陳長榮), a director at Chunghwa Telecom.

The company will make up for the sales reduction of around NT$800 million within three months of the new tariffs taking effect, Chen said.

Mobile services made up the biggest chunk, or around 40 percent, of Chunghwa Telecom's total revenue of NT$38.4 billion (US$1.14 billion) for the first nine months of the year, the company said in a statement.

Chunghwa Telecom now has around 8.1 million mobile subscribers, making up more than a third of Taiwan's 20 million cellphone users.