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Chunghwa Telecom revises projection for next six months

Chunghwa Telecom Co (中華電信), the nation's largest telecom operator, yesterday predicted revenues in the second half would be 5 percent higher than its previous projection.

The company based its optimistic revision on stringent cost control and better-than-expected profits during the first half of the year.

In addition, company chairman Hochen Tan (賀陳旦) told investors yesterday that Chunghwa Telecom planned to continue reducing capital by repurchasing and canceling shares to boost return on equity and better utilize its resources.

Shares of Chunghwa Telecom rose NT$1.1 or 1.95 percent to close at NT$57.5 yesterday.

The stock has declined 5.59 percent since the beginning of the year.

Yesterday's investor conference was held after the local stock market closed.

The telecom company reduced its capital by 9 percent earlier this year and planned to cut another 2.35 percent by buying back and canceling 250 million shares before Oct. 28.

Chunghwa Telecom has 93 percent more capital than rival Taiwan Mobile Co (台灣大哥大) and 250 percent more capital than Far EasTone Telecommunications Co (遠傳電信).

Chunghwa Telecom posted 11 percent growth for net profits to NT$24.6 billion (US$744 million) for the first six months of the year, compared with NT$22.1 billion a year earlier.

"We have offset the rate cut for voice calls requested by the telecom regulator in the first half through strict control of costs. We are optimistic about the second half," president Lu Shyue-ching (呂學錦) said.

The National Communications Commission (NCC) requested local mobile phone companies slash voice call tariffs by 4.88 percent per year over a three year period beginning in April.

"Results for the second half of the year should be better than we thought based on the forecast in April," Lu said.

Consolidated revenues may be 5 percent higher than the company's earlier forecast, Lu said.

The phone company previously estimated it would post NT$86.51 billion for the second half of the year after deducting NT$95.71 billion for the first half from a projected NT$182.22 billion for the overall revenues this year.

If the upbeat forecast is fulfilled, Chunghwa Telecom would post NT$186.55 billion in revenues, compared with last year's NT$184.53 billion.

For the first half of the year, Chunghwa Telecom saw 3.5 percent growth in the number of mobile subscribers to 8.58 million.

The company has a 36.3 percent share of the nation's mobile market.

In addition, the company said that it had completed a three-year early-retirement plan, reducing the number of employees from 27,210 to 24,102 at the end of June.

Salary and pension provisions are expected to fall to NT$32.6 billion at the end of this year, from NT$35.5 billion last year and NT$37.9 billion in 2004, the company said.

Additional reporting by Bloomberg
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