Thu, Jan 15, 2009 - Page 12 News List

Far EasTone sees fall in procurement

SLOWDOWN The telecom company said it could trim handset sourcing this year to avoid an inventory build-up and adjust its product portfolio by cutting pricey models

By Lisa Wang  /  STAFF REPORTER

Far EasTone Telecommunications Co (遠傳電信), the nation’s third-largest telecom operator, is likely to cut mobile phone purchases by as much as 15 percent this year as consumers tighten their purse strings amid a bleak economic environment, a company executive said yesterday.

With overall handset sales in the country expected to decline this year, Far EasTone would be careful about its handset procurement to avoid an inventory build-up, Samuel Yuan (袁興), a vice president at Far EasTone, told reporters.

Yuan said that based on rough internal estimates by the company, its handset sourcing this year could drop by between 10 percent and 15 percent from a year ago.

Last year, Far EasTone bought 1.4 million cellphones, which were bundled with its telecom services for sales to new subscribers or customers renewing their contracts.

The company plans to adjust its handset portfolio by cutting pricey models, while broadening the selection of entry-level phones this year as consumers become more price sensitive amid the economic downturn, it said.

Far EasTone also announced that it had nailed an agreement to exclusively sell Fuiji Ltd’s mobile phones in Taiwan, marking the Japanese electronics manufacturer’s first step in expanding its handset business outside its home market.

“The Year of the Ox will not be very bullish,” Far EasTone vice chairman Jan Nilsson said, with customers becoming “more cautious about making a decision on using new telecom and multimedia services.”

Nilsson attributed the change in consumer’s spending habits to the economic slowdown.

The global economic crisis has taken a toll on Taiwan’s economy since the second half of last year and the outlook for many sectors, including the high-tech industry, looks grim, Nilsson said.

The effect would spread to the telecom industry, he said, adding that voice usage had dropped.

Nilsson, however, believed that the damage wrought by an economic slowdown on the telecom industry would be less severe as the industry provides an essential service.

“People still have to communicate,” he said.

Taiwanese telecom companies may see flat or a slight drop in their mobile revenues this year, Nilsson said.

As for Far EasTone, he said he remained optimistic, which is why Far EasTone has no plans to drastically trim its capital spending nor aggressively change its strategy.

Far EasTone usually allocates about 12 percent of its service revenue to new network buildup.

Separately, Far EasTone, which also won a WiMAX license in July 2007, said it planned to commercially launch the high-speed service by the end of this year, with Taichung being the first stop.

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