Far EasTone profits expected to drop nearly 10 percent

Far EasTone Telecommunications Co (遠傳電信), Taiwan's second-biggest mobile operator, projected that first quarter pre-tax profits would fall nearly 10 percent at a quarterly rate because of stiff competition and lower mobile usage before further price cuts requested by the government.

Pre-tax income would decrease 9.4 percent to NT$3.17 billion (US$96 million) in the first three months, compared with NT$3.5 billion in the fourth quarter of last year, the telecom company said in a filing to the Taiwan Stock Exchange last week.

On an annual basis, earnings per share would decline 13.4 percent to NT$0.71, compared with NT$0.82.

During the same period last year, Far EasTone posted NT$3.16 billion in net income.

INCOME DECLINE

Far EasTone said a 4.7 percent quarterly decline in operating income would be the main reason behind lower pre-tax income amid intensive competition and new price reduction.

The nation's telecommunications regulator, the National Communications Commission (NCC), requested that local service providers slash their rates for mobile services by 4.88 percent per annum to boost market competition and safeguard consumers' interests.

The new price cap rules will take effect for three years beginning in April at the earliest.

Far EasTone said revenues would decrease by 1.3 percent quarter-on-quarter to NT$10.64 billion in the first quarter from NT$10.78 billion, as rising subscribers would partly offset sliding mobile usage on more holidays including the Lunar New Year holiday. A year ago, the company reported NT$17.6 billion in revenues.

Far EasTone did not say how many new users it would gain.

SUBSRIBERS

As of November last year, Far EasTone had 5.36 million mobile subscribers, the NCC's latest tally showed.

Rival companies Chunghwa Telecom Co (中華電信) and Taiwan Mobile Co (台灣大哥大) have 7.67 million and 5.54 million subscribers, respectively.

Taiwan Mobile said last month that pre-tax income would grow 20.5 percent quarter on quarter to NT$4.2 billion in the period from last month through next month.

Earnings per share would be NT$0.65. Revenues would inch up 1 percent quarter-on-quarter to NT$12.2 billion.