Far EasTone increases investor payout a notch

Far EasTone Telecommunications Co (遠傳電信), the nation's second-largest mobile carrier, slightly increased its cash dividend to NT$3.1 per share, based on last year's results, the company said yesterday. The company's announcement came after its board approved the cash dividend issuance proposal.

Far EasTone's board yesterday also agreed to set up an audit committee to further enhance its corporate governance.

The cash dividend of NT$3.1 a share represented about an 8-percent yield for the company's investors, compared to Far EasTone's closing price of NT$39 yesterday on the Taiwan Stock Exchange.

Taiwanese telecom companies tend to deliver comfy cash dividends to attract investors in pursuit of stable returns. Last year, the mobile operator delivered a cash dividend of NT$3 a share.

"Cheap valuations and sound, sustainable yield keep us at `Buy,'" said Citigroup analyst Anand Ramachandran in the report released in mid-January.

Ramachandran gave a target price of NT$45.6 per share for Far EasTone.

Far EasTone posted an audited net income of roughly NT$14.72 billion (US$456 million), or NT$3.8 per share, making the cash dividend payout ratio around 81 percent, similar to those of rivals Chunghwa Telecom Co (中華電信) and Taiwan Mobile Co (台灣大哥大).

For the first three months of this year, Far EasTone forecast that pre-tax profits would hold steady at NT$4.11 billion from a year ago, the company said yesterday.

Earnings per share, however, are predicted to decline to NT$0.85, compared to NT$0.98 a share earned in the first quarter of last year, according to statistics the company filed to the Taiwan Stock Exchange.

Projected revenues for the first quarter are NT$17.98 billion, compared with NT$10.33 billion during the same period last year.

Far EasTone earlier reported pre-tax profits for January of NT$1.3 billion, a 13 percent decline from the same period last year.

But despite that drop, Taiwan Ratings Corp (中華信評), a local arm of Standard & Poor's, raised by a notch its long-term corporate credit rating and its unsecured corporate bond rating on Far EasTone to "twAA+" from "twAA" due to its improved financial situation and strong market position.

Far EasTone has substantially reduced its debt to NT$9.6 billion as of the end of last year from NT$22.8 billion in 2004, Taiwan Ratings said in a statement released on Thursday.

Far EasTone now has 6.1 million subscribers in total, representing about 30 percent of Taiwan's 19 million mobile users.

It has about 110,000 3G phone users.