Mon, Dec 25, 2006 - Page 12 News List

Chunghwa Telecom to build complex

BRANCHING OUT The plan to construct an apartment building in Taipei's Wanhua District is the company's third land-development project, adding to its revenues

By Lisa Wang  /  STAFF REPORTER

Chunghwa Telecom Co (中華電信), the country's largest telecom operator, said it planned to sign an agreement with a local construction firm soon to build an apartment complex in downtown Taipei.

The project will be part of the company's broader plan to revitalize under-used property amid a thriving property market, the company said in a filing with the Taiwan Stock Exchange on Saturday.

Other companies have also recently moved into the property sector, including home appliances maker Tatung Co (大同) and automobile maker Yulon Motor Co (裕隆汽車), which have started developing under-used land by building apartment complexes or office buildings.

The telecom operator said in the statement that it had picked Ruentex Development Co Ltd (潤泰創新國際), one of the nation's biggest construction groups, as contractor to build a housing complex in Wanhua District in west Taipei.

The firms are expected to sign an agreement by the end of next month to jointly develop the 2,332 ping (7,695.6m2) property.

"We will launch more construction projects jointly with local construction companies in the future. Those projects will generate more profits for us," Chunghwa Telecom said.

Chunghwa Telecom did not give further details, such as when the construction of the apartments would begin.

The project is the third of its kind for Chunghwa Telecom, after the phone company signed contracts with local hotel operator Leader Hotel Consultant Co (立德旅館) and construction firm Kindom Construction Co (冠德建設) to build a hotel in Kenting and an apartment building in the suburbs of Taipei last quarter.

Chunghwa Telecom is planning to open bidding by the year's end for the construction of an apartment and a school dormitory in a 1,900-ping property in central Taiwan.

The company still owns around 400 hectares of idle land around the country with one-tenth of it located in downtown districts or sightseeing areas.

Last year, Chunghwa Telecom generated NT$270 million (US$8.29 million) in revenues by developing its under-used real estate. The company's total revenues last year were NT$183 billion.

As the market for voice traffic nears saturation, the company forecast its annual earnings would fall 7 percent annually to NT$44.24 billion on flat revenues at NT$184.2 billion this year.

Chunghwa Telecom said it expected to increase revenues from its property revitalizing efforts this year. It didn't specify the projected money figures or growth rate in the statement, however.

The company is also working to expand revenues from its mobile service amid declining sales in its fixed-line and long-distance businesses. On Thursday, it signed an agreement with Internet search giant Google Inc for mobile users to search the Web.

Nevertheless, the Standard & Poor's (S&P) Ratings Services said it expected Chunghwa Telecom to continue generating robust cash flow this year, reaffirming its "AA-" long-term credit rating and positive outlook for the company.

S&P said Chunghwa Telecom's positive credit profile reflected the company's very strong financial operations and reduced government ownership. Chunghwa Telecom's credit profile may qualify for a higher rating than that of the sovereign rating on Taiwan, S&P said in a statement dated Dec. 13.

S&P is expected to finalize its credit ranking for the firm over the next few weeks after clarification of Chunghwa's strategy and policies, particularly with respect to overseas expansion and balance sheet structure, the statement said.

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