The nation’s top telecom operator, Chunghwa Telecom Co (中華電信), plans to increase capital spending next year to accelerate fiber optical deployment as part of its efforts to fend off intensifying competition from cable rivals, company chairman Lu Shyue-ching (呂學錦) said.
Lu’s remarks came after rival Taiwan Mobile Co (台灣大哥大) said in September it planned to acquire a major stake in the nation’s second-largest cable TV system operator, Kbro Co (凱擘), from private equity firm the Carlyle Group, creating the nation’s biggest cable TV system operator.
“We will defend our market position by aggressively rolling out fiber solutions to our customers,” Lu told an investor teleconference.
Chunghwa Telecom plans to increase capital spending modestly next year from this year’s NT$29 billion (US$888 million) to offer higher-speed Internet access via its fiber optical network, Lu said. He said the company has not yet finalized the capital investment.
“Taiwan Mobile’s acquisition of Kbro’s cable assets, announced on Sept. 16, creates the first strong broadband competitor to Chunghwa Telecom,” Neale Anderson, an analyst with HSBC Securities, said in a report. “We expect this to be negative for Chunghwa Telecom.”
Anderson expected Chunghwa Telecom’s broadband market share to fall to around 58 percent by 2014, which may erode the phone company’s revenue by 3 percent a year to 2012.
Anderson reiterated an “underweight” rating on Chunghwa Telecom.
Broadband business accounts for about 10 percent of the phone company’s total revenues.
Chunghwa Telecom said the growth of fiber subscription next year would be faster than this year. The company aims to add 600,000 new fiber subscribers next year, Lu said.
As of the third quarter, Chunghwa Telecom had 1.5 million subscribers. Chunghwa Telecom also offers digital TV programs on its broadband network and it had 667,000 users as of Sept. 30, up 13 percent from a year ago.
Chunghwa Telecom expected net income to increase 9.6 percent year-on-year, or 7.53 percent quarter-on-quarter, to NT$9.31 billion in the fourth quarter.
Revenues may experience a drop of 1.3 percent year-on-year, or 8 percent quarter-on-quarter to NT$46.13 billion in the current quarter.
Chunghwa Telecom said net income for the full year of 2009 may see a fall of 5.6 percent to NT$42.49 billion, from NT$45.01 billion last year.
The company blamed economic recession and stiffening competition for the reduction.
Revenues would edge lower by 2.2 percent year-on-year to NT$182.73 billion this year, from NT$186.78 billion.
Early last month, the telecom operator said third-quarter earnings tumbled about 18 percent year-on-year to NT$10.92 billion from NT$13.29 billion. While revenues fell 1.7 percent annually to NT$50.06 billion.
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