Chunghwa Telecom Co (中華電信), the nation’s biggest telecom operator, aims to trim 10 percent of the marketing budget for its mobile business to prevent earnings from further eroding as a result of the recession, a company executive said yesterday.
The company said, however, that it would maintain spending on new equipment — mostly for its next-generation network — at between NT$30 billion (US$882 million) and NT$32 billion over the next two to three years.
The company budgeted NT$30 billion for new equipment last year.
Amid stiff competition for customers, Chunghwa Telecom budgeted approximately NT$10 billion last year for mobile marketing, including between NT$6 billion and NT$7 billion in subsidies for purchases of handsets bundled with its mobile services, the company said.
“This year, we aim to trim spending on mobile marketing by 10 percent. We will make some adjustments to the subsidy [policy] in accordance with the [bleak] global economy,” Chunghwa Telecom chief financial executive Joseph Shieh (謝劍平) told reporters.
The company would be selective in offering handset subsidies, Shieh said, adding that heavy users could benefit the most from its new subsidy policy.
Last year, Chunghwa Telecom’s consolidated earnings dropped 6.7 percent to NT$45.01 billion after adjustment from NT$48.25 billion in 2007. The company reported a 18.9 percent decline in its fourth-quarter net income to NT$8.5 billion, partly because of NT$1.2 billion in asset impairment losses.
Operating spending increased 4.4 percent to NT$143.04 billion last year from NT$137.02 billion the previous year.
Increases in handset subsidies, mobile phone purchases and spending on employee bonuses are the main reasons behind the expansion in operating cost, Shieh said.
To cut costs, Chunghwa Telecom plans to offer another early retirement program, possibly by the end of June, company chairman Lu Shyue-ching (呂學錦) told an investor conference yesterday.
Some 160 employees applied for a preferential early retirement program last year, Lu said, adding that the number could be the same this year.
The figure is small compared with the response in previous years, when the company offered similar retirement packages.
The company employs 25,000 people.
Chunghwa Telecom has 9.8 million mobile subscribers, representing about 35.2 percent of the market.
Shares of Chunghwa Telecom fell 1.6 percent to NT$61.5 yesterday, outperforming the benchmark TAIEX, which fell 3.43 percent.
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