Vibo's new CEO takes on profit challenge

After repeatedly missing its break-even target, Vibo Telecom Inc (威寶電信) is preparing to do battle again with a new chief executive at the helm -- telecom veteran Chang Feng-hsiung (張豐雄), who used to serve as an executive vice president at market leader Chunghwa Telecom Co (中華電信)

Vibo, the nation's pure third-generation (3G) telecom service provider, has yet to make a profit as it has failed to attract enough subscribers to achieve economies of scale amid a saturated telecom market.

In a surprise announcement last Thursday, Chang said he was retiring from Chunghwa a year earlier than planned to take on new duties. Vibo announced his appointment as chief executive later that evening. The Vibo post had been vacant for a year after David Wang (王柏堂) resigned as president in December last year after failing to meet his goal of turning the company's operations around.

NEW START

"This is a new beginning in my career," Chang told reporters after his debut at Vibo's service launch yesterday.

Chang said he left Chunghwa because he was attracted to Vibo chairman Rock Hsu's (許勝雄) rare vision of building a 3G empire.

Chang, 64, was with Chunghwa for more than three decades, serving in different capacities and departments, including billing, marketing and broadband service. He is known for helping Chunghwa recoup its top position in 1996 by turning the company's employees into salespersons in the early stage of government deregulation.

Talking about his new job, Chang said: "The priorities will be boosting subscriptions and expanding revenues by selling new services that will differentiate Vibo from other telecom companies."

Corporate users are the main battlefield, he said.

Senior citizens will also be a target given this expanding market, he said.

Chang declined to give specific figures nor comment on the company's goal to break even in August next year. As of June, Vibo had accumulated NT$7.7 billion (US$237 million) in losses since the commercial launch of its 3G services in 2005.

"I have set a challenging target for myself," Chang said.

After three years of commercial operation, Vibo only has 660,000 subscribers, which is less than a third of Chunghwa's 2.2 million 3G users.

NO CURE ALL

Despite Chang's determination to revamp Vibo, "hiring a chief executive from rival is not a cure all," said Lu Chia-lin (呂家霖), a telecom industry analyst at Yuanta Core Pacific Securities (元大京華證券).

Vibo's broken coverage has shut potential users out of the door as it lacks a second-generation (2G) network to fill the network gaps as the nation's major players did, Lu said.

The lack of more diversified 3G contents industrywide is also a key reason behind Vibo's slow expansion, he said.

"Lowering rates is the only thing Vibo can do to lure subscribers from other operators," Lu said.

Chang appeared to already have all his options in mind. He said that resuming handset subsidies, cutting rates and reshaping the retail channels would be some of approaches.

PRIORITY

Improving Vibo's coverage would also be high on his priority next year, he added.

Vibo "will certainly increase capital spending next year," Chang said. This year, Vibo plans to spend NT$3.5 billion on new equipment.

But that seems to be another difficult task, Lu said, as Vibo would need another NT$20 billion to improve its coverage to satisfy subscriber.