Thu, Mar 25, 2010 - Page 12 News List

Far EasTone boosts capital spending

CAPACITY EXPANSION Most of the expenditure would be used for 3.5G network deployment to boost bandwidth speed, the nation’s No. 3 telecoms operator said


Far EasTone Telecommunications Co Ltd (遠傳電信) raised its projected capital spending this year to a record NT$11.5 billion (US$361 million) to cope with growing demand for higher bandwidth for high-speed multimedia downloading, a company executive said yesterday.

The projected expenditure would be approximately 26 percent higher than last year’s NT$9.1 billion and would be mostly used for 3.5G network deployment, said Far EasTone, the nation’s No. 3 telecoms operator.

“We are not just selling voice service. Instead, we are selling everything [telecom customers need],” Far EasTone chairman Douglas Hsu (徐旭東) said.

As Far EasTone’s business is shifting from voice to wireless multimedia, the company needs to increase capacity to cater to customer demand, company vice chairman and president Jan Nilsson said.

It needs to accelerate its capacity expansion following the launch of its own application store, dubbed “S Mart,” in October for local mobile users to download multimedia services and introduction of Apple Inc’s iPhone, which allow mobile users to get access to e-mails and other data services such as music, earlier this month.

Far EasTone was also in talks with Chinese telecoms operator, China Mobile Ltd (中國移動), to offer the application services in China by the end of this year at the earliest, Nilsson told investors last month.

Mobile users, of which 60 percent subscribe to other telecoms operators, have downloaded a total of 130,000 applications since the launch of S Mart in the middle of October, Far EasTone said.

Aided by the rise in multimedia downloading, Far EasTone expects revenue to rise by more than 3 percent to NT$62.07 billion this year, offsetting a price erosion stemming from the government’s request to lower tariffs for short messages and mobile off-net voice service by 5.87 percent.

Rising revenue could help it overtake Taiwan Mobile Co (台灣大哥大) and recoup its position as the nation’s No. 2 telecoms operator.

While anticipating stronger revenue, Nilsson said “margin will shrink” in the next two years amid intensifying competition and the higher cost of offering more smartphones.

Services EBITDA margin could fall to 43 percent this year from 45.2 percent last year, he said.

Net income could increase to NT$9.29 billion, or earnings per share of NT$2.85, this year, helped by a lower tax rate, compared with NT$9.23 billion, or NT$2.83 a share, last year, the company said.

Shares of Far EasTone inched up 0.53 percent to close at NT$38.15 yesterday, beating the benchmark TAIEX, which rose 0.14 percent.

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