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Chunghwa Telecom chairman expects profit rise this year

Taiwan's top telecom operator Chunghwa Telecom Co (中華電信) expects profits to rise further this year, benefiting from the growing data and multimedia services market and rising corporate customers, a company executive said yesterday.

Chunghwa Telecom pins its hopes on growth in these new areas to offset the falling landline business and a stalling mobile voice service amid stiff competition in the nation's saturated telecoms market.

"We are cautiously optimistic about this year's growth [in terms of profits] ... We hope this year's profits will not be worse than those of last year," chairman Hochen Tan (賀陳旦) told reporters during a luncheon, adding that it would be the result of the phone company's ongoing restructuring efforts.

Growth in the corporate customer unit in the wake of the separation of the business last year and the rising usage of data services, or value-added services, would be crucial for the anticipated profits expansion, Hochen said.

Revenues from mobile value-added services rose 30 percent annually last year, the telecom company said.

"The growth will be even faster this year," Hochen said.

Hochen did not give a detailed forecast on profits growth.

Chunghwa Telecom posted lower profits of NT$44.9 billion (US$1.36 billion), or NT$4.63 per share, for last year, down 5.7 percent from NT$47.65 billion, or NT$4.94 a share, in 2005.

Hochen also said Chunghwa Telecom was scheduled to finalize the much-anticipated capital reduction plan by the middle of next month in time for a review at the annual shareholders' meeting, with the aim being to boost return on equity (ROE).

Chunghwa Telecom, which is 42 percent owned by the government, is considering paying shareholders an unspecified amount of cash from its accumulated assets worth NT$210 billion, Hochen said.

He added that Chunghwa Telecom would not carry out the plan by cutting capital, as is the case with most Taiwanese companies performing a capital reduction.

"Investors should welcome this approach," financial executive Joseph Shieh (謝劍平) said.

The reduction would boost the company's ROE, currently at around 12 percent, which lags far behind its international peers and local rivals, such as Taiwan Mobile Co (台灣大哥大), Shieh said.

Most global peers posted 18 percent to 20 percent in ROE, Shieh added.

Chunghwa Telecom has NT$96.68 billion in capital and NT$60 billion in cash and the equivalent.

The company planned to spend about NT$30 billion on new facilities and equipment this year, almost unchanged from the NT$30.5 billion spent last year.

Shares of Chunghwa Telecom advanced 0.32 percent to NT$61.
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