Vibo aiming to topple top mobile service providers

Vibo Telecom Inc (威寶電信), a late entrant to the nation's telecom operator market, said yesterday that it aims to break even next year, counting on rapid growth in subscribers to reduce fixed cost per unit.

Offering attractive voice tariffs and affordable handsets, Vibo has gained an almost 10 percent share of the nation's 1.9 million third-generation cellphone users since the company launched its high-speed services last December.

Vibo's success has prompted major players Chunghwa Telecom Co (中華電信), Far EasTone Telecommunications Co (遠傳電信) and Taiwan Mobile Co (台灣大哥大) to cuts rates as they brace for increased competition.

Vibo has ambitions of breaking the dominance of the big three and aims to boost its market share to around 25 percent, or 750,000 users, by the end of this year, Vibo chairman Rock Hsu (許勝雄) told shareholders in an annual meeting yesterday.

Thanks to the rapid growth in subscribers, Hsu said, "Vibo will break even in September next year."

In its first year of operation, Vibo posted losses of NT$869 million (US$27.14 million), or NT$0.87 a share, on sales of NT$1.51 billion. That brought the company's accumulated losses to around NT$2.17 billion.

"An increase in subscribers makes it possible for a telecom operator to reduce fixed costs per unit and further improve the company's bottom line, as the investments in equipment required are huge," said Lu Chia-lin (呂家霖), a telecom industry analyst with Yuanta Core Pacific Securities (元大京華證券).

However, Vibo is still expected to post losses this year, as most companies do in their first few years of operation.

Hsu said Vibo has no plans to raise funds.

"We still have sufficient cash in hand," he said.

Vibo obtained NT$9.2 billion in syndicated loans and NT$5 billion in proceeds from share sales last year, which will be spent on buying new equipment, according to the company.

Compal Electronics Inc (仁寶電腦), the world's No. 2 laptop computer maker on a contract basis, and consumer electronics maker Kinpo Electronics Inc (金寶電子) are Vibo's major shareholders with 20.29 percent and 34.05 percent stakes respectively.