Far EasTone Telecommunications Co Ltd (遠傳電信), the nation’s third-biggest telecom operator, said yesterday it was relatively positive about the second half of the year as it could be less affected than local competitors by the economic crisis.
The comments came after industry leader Chunghwa Telecom Co (中華電信) yesterday said its pre-tax income could plunge about 30 percent year-on-year to NT$11.79 billion (US$358 million) in the third quarter, blaming rising handset subsidies, falling tariffs amid an economic downturn as well as less non-operating gains.
Far EasTone said it did not expect all local telecoms operators to follow suit in forecasting weaker third-quarter profits.
“It depends on their strategies,” Far EasTone vice chairman Jan Nilsson said. “We will not be more pessimistic about the third and fourth quarters,” he said, implying that the company’s third-quarter earnings would not drop drastically, if at all.
Chunghwa Telecom’s aggressive subsidizing of high-end smartphones such as Apple Inc’s iPhone was costly and could be one of the main reasons behind its forecast of profit decline, Nilsson said.
Chunghwa Telecom said earnings before interest, tax and amortization margin could fall to 45.21 percent this quarter from 50.51 percent a year a ago, it said in a statement late on Tuesday.
Far EasTone has kept a low profile on subsidizing high-end smartphones and has kept subsidy levels relatively stable, Nilsson said, adding that the market was saturated.
The company is scheduled to release its third-quarter forecast on Aug. 20.
In search of new growth drivers amid a saturated voice market, Far EasTone said it intended to sell electronic readers along with its wireless Internet service by the second quarter of next year.
This could make Far EasTone the first Asian telecoms company to sell electronic readers in its service packages.
“We are continuing to search for new services and applications for revenue growth. In that respect, it is logical that the e-book business would create a new growth engine for us,” Nilsson said.
Yesterday, Far EasTone signed a memorandum of understanding with local bookstore chain Eslite Bookstore (誠品書店) and local TV station Sanli Television (三立電視) to provide digital content for users of electronic readers.
The carrier said it was in talks with several local electronic reader makers for supply. Computer makers such as Asustek Computer Inc (華碩), Quanta Computer Inc (廣達), Hon Hai Precision Industry Co (鴻海) and handset maker Inventec Appliances Corp (英華達) have approached Far EasTone about possible cooperation.