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Taiwan Mobile Co expecting steady earnings this year

Taiwan Mobile Co (台灣大哥大), the nation's third-largest mobile operator, said yesterday that earnings would hold steady this year because of scant growth in new subscriptions in the highly competitive Taiwanese market, which is reaching saturation point.

Some 20 million of the nation's 22 million people have mobile phones, bringing the market penetration rate close to 90 percent, according to the government's latest statistics.

"The market is quite stable. Competition will be as stiff as before," Taiwan Mobile president Harvey Chang (張孝威) told reporters during a press gathering to introduce the firm's new chief financial officer Vivien Hsu (許婉美).

Chang implied that he did not expect the launch of number portability and the entry of Vibo Telecom Inc (威寶電信), a pure third-generation (3G) operator, to the market late last year to change the nation's telecommunications landscape.

Taiwan Mobile plans to roll out more attractive rate packages to hold on to existing clients and attract new users. Taiwan Mobile now has 5.98 million subscribers.

Taiwan Mobile posted a net income of NT$16.24 billion (US$510 million) for last year, down 2.53 percent from the previous year, without including earnings from subsidiaries Trans Asia Telecommunications Co (泛亞電信) and Mobitai Communications Co (東信電訊).

Earnings per share was unchanged at NT$3.31. Revenue expanded 7.19 percent to NT$48.33 billion last year from 2004.

To attract investors, the company will extend its policy of delivering high cash dividends this year, Chang said. “This year's cash dividend will not be lower than last year,” he said.

Taiwan Mobile paid around NT$2.50 per share in cash dividends to shareholders last year, based on earnings per share of NT$3.46 for 2004.

Overseas investors held a stake of around 34 percent in Taiwan Mobile, approaching the legal cap of 47 percent on foreign investment, according to the statistics of Taiwan Stock Exchange.

“It is important for Taiwan Mobile to extend its rule of paying fat cash dividend as most foreign fund managers buy the telecom stocks for stable return rather than explosive growth,” said Lu Chia-lin (呂家霖), an analyst with Yuanta Core Pacific Securities (元大京華證券).

Hsu said yesterday that Taiwan Mobile offered a better yield rate than most high-tech stocks.

The yield rate would be around 8.8 percent this year, based on Taiwan Mobile's closing price of NT$28.45 yesterday, based on the NT$2.50-a-share cash dividend for 2004, she said.

Bigger rivals Chunghwa Telecom Co (中華電信) and Far EasTone Telecommunications Co (遠傳電信) are also adopting a policy of lavish cash dividends to attract investors, Lu said.
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